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FOMC Minutes: Figuring Out Who Said What

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Yesterday's FOMC minutes did little to boost market expectations of a rate hike, pushing the dollar lower. The ECB is releasing minutes of its own today, while emerging-market equities are at a one-year high. Here's what people in markets are talking about today.

Fed minutes show a split

While FOMC minutes released yesterday showed that a couple of Federal Reserve officials backed a rate hike at the July meeting, overall the committee remained split on whether the slowdown in jobs growth means the labor market is nearing full employment or whether it's indicative of an economy that needs resuscitating. That left Fed fund futures implying balanced odds that there'll be a rate hike by the end of 2016 — a probability that's not much changed from before the minutes. Officials appeared inclined to continue normalizing rates, but their evident lack of urgency left the dollar trading weaker against most world currencies, setting the tone for much of the markets' overnight moves.

Clues about ECB QE

The European Central Bank is releasing minutes of its own at 7:30 a.m. New York time, which may give investors some clues about the future of its bond-buying program. While inflation is a rare point of consensus among U.S. monetary policy officials, it remains an issue on Mario Draghi's side of the Atlantic, where Sweden is selling inflation-linked bonds and euro zone data showed a tiny acceleration in consumer-price gains (to 0.2 percent in July versus June's 0.1 percent.) U.K. retail sales rose 1.4 percent in July, more than a percentage point faster than economists' expectations, suggesting the economy began its first post-referendum quarter on a strong footing. That has the pound 0.9 percent stronger to $1.3153 as of 4:38 a.m. ET.

Japanese exports fall

Japanese markets are feeling heat from the Fed, with the yen strengthening past 100 to the dollar in the day's trading, sending the Topix index 1.6 percent lower by the close. New data underscored the growth-sapping impact of a stronger yen as the country's exports fell 14 percent in July from a year earlier, the most since 2009 and the tenth consecutive month of declines. The Bank of Japan will review its monetary policy next month, amid fears it is running out of firepower to reflate the economy, while Japanese lenders say they have less flexibility to sell their government bond holdings to the central bank compared with earlier in the year. Meanwhile, part-time labor helped the Australian economy add more than twice as many jobs as economists were expecting, pushing the aussie higher. 

Property market wobbles in China

Data suggest the Chinese real-estate sector — a key driver for the economy’s expansion in the first half of the year — is slowing down while imbalances are growing. In July, new-home prices rose in 50 out of the 70 cities tracked by China’s statistics agency, compared with 55 cities in June, while prices fell in more cities for a fourth consecutive month. Bloomberg Intelligence data for July also show property prices in top-tier cities are advancing while sentiment in lower-tier cities is cooling. The divergent outlook could place Beijing in a policy bind as it seeks to stabilize growth in the second half of the year. The yield curve on Chinese bonds is at its flattest since early 2015.

Emerging markets bask in Fed's glow

While UBS Group AG has said emerging markets can't ignore the math of a Chinese slowdown forever, the asset class was lifted this morning by the weaker dollar — even if that's boosting some more than others. All ten industry groups of the MSCI Emerging Market Index were trading higher by 4:31 a.m. in New York, with Samsung Electronics Co.'s share price surging to a record

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