Minutes More Dovish Than Expected, Global Equities Lower

 | Aug 20, 2015 06:55AM ET

Market Brief

US 2-year Treasury yield dropped 8bps, the 10-year 11bps while the dollar lost almost 1% versus the euro, 0.50% versus the CHF and 0.70% against the NZD. In New York yesterday, the S&P 500 paired losses and retreated -0.83%, while the Nasdaq fell -0.80% and the Dow Jones -0.93%. There is no doubt, September-rate-hike-enthusiasts did not like the minutes of the last FOMC meeting. Fed members “judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point,” adding that “the Committee's communications around the time of the first rate increase should emphasize that the expected path for policy, not the initial increase, would be the most important determinant of financial conditions and should acknowledge that policy would continue to be accommodative.” Fed members seem to be pretty comfortable with the labour market, while some are still concerned about low inflation and wage pressure. In our opinion, a September rate hike cannot be ruled out but it’s not a coin flip anymore, December is appearing more and more likely.