At dawn on July 9th, Beijing time, the Federal Reserve will release the minutes of its June monetary policy meeting. The meeting maintained interest rates unchanged, but the dot plot showed a clear division: nine members supported at least one more rate hike this year, eight expected rates to remain unchanged, and one supported a rate cut. New Chairman Kevin Warsh unusually did not submit any dot plot forecasts, and market focus is now on the policy conditions of the hawkish camp.
Due to the significantly shortened June policy statement and limited forward guidance, the minutes will be a crucial window for the market to judge the true inclinations within the Fed. Investors want to know whether those supporting rate hikes are primarily concerned about sticky inflation, and under what circumstances they would push for a renewed tightening of policy.
Previously, the market widely bet that slowing employment data would prompt the Fed to shift to easing, but recent rapid increases in oil prices due to geopolitical risks have rekindled concerns about energy-imported inflation. If the minutes show that the committee remains highly concerned about inflation risks, expectations of "higher interest rates for longer" may resurface.
In terms of market impact, hawkish signals could push the dollar stronger, US Treasury yields higher, and put pressure on highly valued technology stocks. Meanwhile, rising US Treasury yields and a stronger dollar could further suppress the performance of non-dollar assets.
