I don’t see any particular bias or skew in the market ahead of the Fed. This is one to wait for the headlines and then trade them.
If you’re not primed for the Fed, here’s a preview of what to watch from Hilsenrath & Co.
Things I can see happening, and how to trade them:
- The market is complacent. That would point to larger, sustained moves on a significant surprise in rhetoric. There would be plenty of time to get into this trade and ride it after the headlines hit.
- Fed changes in rhetoric are real but deep in the margins and don’t meaningfully change expectations centered around a March taper. Fade the kneejerk.
- Plain statement, slight downgrades on outlook with nothing much to chew on. Look for opportunities to get back in USD shorts.
