FOMC isn’t worried about dollar, low inflation or labor market

•     FOMC isn’t worried about dollar, low inflation or labor market

–    Minutes of latest meeting said they revised down the impact of stronger dollar on GDP

–    Might begin tightening even when core inflation is at current low levels

–    Confident that labor market is improving towards their goal

–    Participants were concerned that the market might think tightening was already fixed for mid-year, whereas it could be earlier or later depending on economic conditions

–    Market interpreted the minutes as slightly dovish; FF expectations down 2.5 bps

–    Yet they are clearly headed towards tightening, while Europe, Japan are loosening

•     US trade balance narrows more than expected due to oil

–    Likely to help USD over the longer run

•     Polls in Greece suggest SYRIZA could get majority

–    Collapse in support for smaller parties means more seats for winner

–    More talk of how SYRIZA’s positions aren’t extreme; could fade as market topic

•     Today:

–    Eurozone: German factory orders forecast to fall

–    UK:  Bank of England MPC meeting likely to be non-event

–    Sweden:  Minutes of latest policy meeting

–    US: Initial jobless claims