Halister News

(Bloomberg) -- Base case for tomorrow’s FOMC statement is for median 2016 dot to shift lower to 3 hikes from 4 while risk assessment should signal a “slightly dovish leaning,” and keep a June hike alive, TD strategists say in note.

• Under that scenario, to which they assign 55% probability, 10Y yield should fall by -2bp by end of day
• Hawkish bias (20% probability) would “set the stage for an April hike” via statement containing “balanced” or “nearly balanced” and SEP with upgraded inflation projections, lower unemployment rate and 2016 hike pace reduced to 75bp; 10Y yield should rise 5bp
• Dovish bias (25% probability) would include statement citing “downside risks,” median 2016 dot lowered to 3 hikes, core Fed members’ dots reduced to 2 hikes, and lower long-run fed funds rate projection; 10Y yield should drop 10bp