• Minutes: Fed sees ‘restrictive’ policy staying in place until inflation eases
• 10-year Treasury yield resumes slide post minutes, down 5.4bps to 4.599%
• Inflation expected to moderate given energy price trends in September; while core proves to be sticky

These Fed Minutes seem to be particularly old given everything we’ve seen with rates, a new war, and a gloomier outlook for the economy.  The Minutes noted that policy should remain restrictive for some time until the Committee is confident that inflation is moving down sustainably toward its objective.  The Fed acknowledged given how restrictive monetary policy has become that the risks to the achievement of the Committee’s goals had become more two sided. Many noted data volatility and potential data revisions, or the difficulty of estimating the neutral policy rate, as supporting the case for proceeding carefully in determining the extent of additional policy firming that may be appropriate.

Wall Street seems confident the Fed is done raising rates this year.  A lot has happened since the September 19-20th FOMC policy decision and it seems the Fed can park rates here and wait to see how quickly inflation falls to their target.  If the consumer finally shows major signs of weakness this earnings season, Fed rate cut bets will become bolstered for the spring time.

The dollar initially pared losses against its major trading partners following the release of the Fed minutes, with the dollar-yen erasing the majority of losses that stemmed from the start of the trading week. The safe-haven flows that went into the Japanese yen from the Israel-Hamas war have mostly been unwound. Currency traders will pay close attention to the upcoming inflation report which could suggest restrictive policy might have to stay in place even longer.

USD/JPY 30-minute chart

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