Do Today’s Fed Minutes Matter?
When you see the phrase “Fed Minutes” don’t confuse it for the “Fed Announcement.” Both events involve a Fed meeting, but one of these things is not like the other. The announcement happened 3 weeks ago and resulted in a rate hike, policy statement, and press conference. Today’s minutes are just that: the minutes from the meeting that took place 3 weeks ago. Given that the Fed meeting occurred before all of February’s data-driven drama, it’s hard to imagine they’ll change the narrative much. Nonetheless, we always give Fed events a wide berth when it comes to their volatility inducing potential.
In the bigger picture, it’s not about the Fed as much as it’s about the data that will inform the Fed’s decisions. That’s precisely why February has been so bad: the data says the Fed needs to hike a few more times and keep rates higher for longer.
The net effect is that longer-term rates were unable to break below the “challenge zone” seen in the chart below as 3.4-3.6 in 10yr Treasury yields. Rates have spiked enough at this point that any moderation in the data could coincide with a show of support in the 3.9-4.1 range. That’s our current order of business (to keep an eye out for signs of such support).