@ The White House
In the morning, the President will deliver remarks at an American Latino Heritage Forum being hosted by the White House and the U.S. Department of the Interior to celebrate the past and ongoing contributions of American Latinos who have helped shape America?s rich and diverse history.
In the afternoon, the President will meet with the National Association of Evangelicals Executive Committee. Later, the President will meet with Secretary of Defense Panetta in the Oval Office.
@ Wall Street
On Wednesday at 1400EDT/1800GMT, the Fed will release the minutes of the Sept.20-21 FOMC meeting, at which the Fed unveiled ?Operation Twist,? its program of lengthening the maturities of Treasury debt in its portfolio to suppress long-term market interest rates. We think the crucial issue will be to what extent the FOMC discussed a third round of asset purchases, known as QE3.
At this point, based on recent comments by Fed Chair Bernanke that the Fed does not have any ?immediate plans? to re-start asset purchases, we think there is only a small minority of FOMC members advocating for QE3. If the minutes bear this out, we think it may lead to a sense of despair among investors that the Fed is no closer to providing additional stimulus, possibly sending risk markets lower and buoying the USD.
However, if QE3 was the subject of a more extensive discussion and more than a few members were arguing in favor of it, then markets may conclude more Fed help is likely and prompt further gains in the current risk rebound, likely denting the USD in the process.
In line with our view that only very few members were in favor of QE3 in Sept., we think the FOMC?s overall discussion of the risks to the US economic outlook may depress market sentiment and potentially contribute to weakness in risk assets.
