Recent FoMC meeting suggests a more hawkish Fed (than what
markets expected) that seems determined to normalize monetary policy. Fed
retained its forward guidance and detailed balance sheet reduction plans.
Fed Chair Yellen’s dismissal of the moderation in price pressures as
transitory and believes that the tightness in labor market should
translate into higher wage cost going forward. We believe upside surprise
to US data should make the case for vols to rise and financial conditions
to tighten
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