Danske Daily: FOMC Minutes, BoE Minutes

FOMC Minutes. It will be interesting to see how worried FOMC members were about the softness in economic data received up to the meeting. Discussions (if any) about the timing of the QE exit should draw special attention.

Fed chairman Bernanke's testimony on the Economic Outlook may also provide some information about the Fed's view on the labour market and a possible exit from the QE programme. Recent Fed speeches suggest an exit is not imminent, though.

BoE Minutes. We expect the vote split on additional asset purchases to be unchanged from April (6-3 maintaining current policy). In fact, it is more likely the minority decreases given the recent small, but yet encouraging signs in the data flow.

Watch out for Kurodas press conference following this morning's Bank of Japan meeting.

In Scandi markets, a set of second-tier events today: Danish consumer confidence, Statistics Sweden's Investment Survey and deputy governor at Norges Bank Qvigstad speaking.

Selected market news

Those looking for firm hints that the Fed is about to scale back on asset purchases were disappointed by both Bullard and Dudley (the latter notoriously dovish) last night. Bullard (centrist-hawk) speaking in Frankfurt on Tuesday afternoon said that the Fed should continue its bond buying, and at the same time used the opportunity to finger-wag the ECB, suggesting Europe should consider quantitative easing (QE) to avoid a Japanese debt-deflation spiral. Later in the evening, Dudley (dove), previously a good lead on Fed policy, said that he could not be sure whether the next Fed move on QE would be 'up or down', and thus failed to deliver the hawkish shift, which would have been a clear hint that tapering is just around the corner. Equities and bond prices were lifted by the speeches whereas USD has moved lower. Not least Dudley's comments suggest that neither Bernanke nor today's FOMC minutes will hint at an early QE exit. We continue to look for the Fed to start tapering its purchases in Q4.

Bank of Japan (BoJ) as expected kept its monetary base target unchanged at JPY270trn this morning. Kuroda and his board upgraded BoJ's assessment of the economy, underlining that growth has started to pick up and that while CPI may fall in the near term it is expected to increase later on. Improvement within the external sector was indeed confirmed by the release of trade figures overnight, revealing a rise in export growth, albeit by less than generally expected. Notably the BoJ made no comments on the recent rise in Japanese yields which some Japanese business are increasingly worried about could hurt their funding. Yields slightly up but JPY little changed after the meeting. Markets will be alert to any comments on the rise in yields at the BoJ press conference later this morning (at 08:30 CET) to see whether Kuroda provides any second thoughts on BoJ policy. We look for BoJ to continue its aggressive stance, which not least will be needed next year when the fiscal drag on growth is set to be severe.

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