All eyes on Wednesday’s FOMC announcement

Although Treasury yields somewhat surprisingly fell after the larger-than-expected rise in last month’s inflation in the US, the dollar is ending the week slightly stronger against most currencies. Attention next week will be focused on the FOMC meeting, and especially on whether Fed officials start ‘talking about talking about tapering’ asset purchases. While we don’t expect the FOMC to formally announce tapering until later this year, any hints about its intentions in that regard could provide some support for Treasury yields and the dollar.