REUTERS/Jim Young
U.S. Chairman of the Federal Reserve Ben Bernanke listens to questions as he testifies before a House Budget Committee hearing on "The Near-Term Outlook for the U.S. Economy" on Capitol Hill in Washington, January 17, 2008.
The minutes are being billed as the key event in an otherwise relatively quiet week on Wall Street. The reason: the minutes should give us the clearest look yet at the Fed's intentions with regard to whether the central bank will begin to taper back the pace of bond purchases it makes each month at its September FOMC meeting.
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This prospect has led to a massive sell-off in the U.S. Treasury market this summer, which in turn has roiled stock, bond, and currency markets around the world. As such, investors are basically hanging on the Fed's every word.
"If the Fed is close to a September taper, then we would expect some discussion of operational details in the minutes, such as how much to taper and in which assets – MBS or Treasuries," writes BofA Merrill Lynch's U.S. economics team in a preview of the release. "We expect some debate over all these issues but no resolution – the nature of the taper is likely to be a "game-day" decision, and there are many possible intermediate scenarios between no taper and current market expectations."
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