Synopsis:

Bank of America expects the July FOMC minutes to convey a dovish tone, reflecting discussions around rate cuts, though they may be somewhat outdated given recent economic data. Attention will soon shift to the Jackson Hole Symposium, where Fed Chair Powell's speech is anticipated.

Key Points:

• Stale Minutes:

  • The July FOMC minutes may appear somewhat stale as they do not reflect recent data on jobs, inflation, and retail sales.
  • Chair Powell indicated that the committee discussed rate cuts at the July meeting, with the minutes likely revealing a dovish tone, though no mention of outsized rate cuts is expected.

• Jackson Hole Symposium:

  • The Jackson Hole Symposium begins on Thursday evening, with Powell scheduled to speak on Friday, August 23.
  • Historically, Fed Chairs keep a low profile at Jackson Hole to avoid front-running the committee on upcoming monetary policy decisions.
  • Powell might reiterate his July message, with potential signals suggesting that the committee is "very close" to initiating rate cuts.

• Potential Dovish Signals:

  • A dovish shift could be signaled by Powell emphasizing the need to avoid "unexpected weakness" in the labor market, rather than merely responding to it post-factum.

Conclusion:

BofA anticipates the July FOMC minutes to lean dovish, focusing on discussions of rate cuts. However, the minutes may seem outdated given recent economic developments. All eyes will be on Powell’s speech at Jackson Hole, where he may reiterate previous messages or offer subtle clues about the Fed's future rate-cutting trajectory.