Fed to provide further details on balance sheet normalization - Barclays

Analysts at Barclay present a brief preview of the 2-day FOMC monetary policy meeting starting Tuesday this week.

At the Sept meeting, the Committee will published the Summary of Economic Projections (SEP)

Key Quotes:

The Fed is unlikely to raise rates Wednesday but instead will likely provide further details on balance sheet normalization.

Its forecasts, however, should remind markets that further tightening is required, supporting short-term US interest rates and the USD.

We do not expect a reduction in the Fed's balance sheet to trouble financial markets, but if UST term premia rise sharply, EM high-yielders are most vulnerable, particularly Brazil and Turkey.