Despite tensions between Saudi Arabia and Iran, North Korea claiming to have detonated a Hydrogen bomb, and PMI numbers coming out across the globe; the Fed minutes will still shape the outlook of traders in the US. The markets have been trying to build a story to work on over the frequency of the rate increases and what the projected rates will be in a years time. Having a much lower expectation of how much the Fed will raise rates is a product of the fears that are in the market as well as muted inflation expectations due to lower oil and turmoil in China.
The dangers of this discovery process is putting too much emphasis on too little information up front. Especially with the markets having some shell shock at the start of the year, any signs of internal debate among the voting members, or solid resolve will be taken through a negative lens. The past few days have made it tough to look at the longer term trends that are going to determine if inflation will keep up and rates will need to be increased. Longer term data is going to be the ultimate factor that determines whether the Fed gives in and lowers their expectations while the market has a hard time not putting their prevailing bias into the equation.
Inflation rates, Source: investing.com