Ok, here comes the main event.

There’s been so much written about this over the past two weeks that it would be impossible to try and summarize it (some recent posts here and here and here), but the bottom line is that all eyes are first and foremost on the median 2018 dot (four or three?). Then there’s the growth outlook in the SEP (upward revision and by how much?) and the unemployment forecast (downward revision?). The statement will be parsed for the extent to which it aligns with or is designed to partially offset the new forecasts and also for what it says about the balance of risks. More simply: where is the “headwinds become tailwinds” meme going to show up more clearly? In the statement or in the SEP?

The presser will be a crap shoot as no one knows how effective a market whisperer Powell is going to turn out to be. Key here will be how aggressive he is at reinforcing the message from his first day of testimony on Capitol Hill late last month. There may be some questions about the tariffs, which should be interesting – how do you balance out the myriad unknowns there with the expected economic sugar high from fiscal stimulus and won’t both the stimulus and the tariffs prove inflationary?

Here’s an annotated dollar chart with notable Fed-related news although this is practically worthless because the dollar is pulled in all directions by all manner of shit, some of which has nothing to do with the Fed:



This is probably critical in the decision calculus for the committee:



As one analyst we spoke to this afternoon put it, “in the light of recent discussions about flatteners, the Fed probably doesn’t want to be a cause of further flattening.”

Morgan Stanley’s Matthew Hornbach told Bloomberg TV that he expects the curve to “achieve complete flatness at some point later this year.” I’m not sure “achieve” is the best word there, but you get the point.

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