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Market Bracing for Backward Looking Fed Minutes

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There's a documented trend showing that students who are seniors suffer an "ebbing of motivation and effort" the closer they get to graduation day. It's called senioritis — and some say it may have taken hold of the outgoing Fed chief, Ben Bernanke.

"He may be catching a little bit of senioritis here," says economist Kevin Cummins of UBS Investment Research in the attached video. "Seems he's pretty much out the door in January."

As Cummins sees it, the two-term leader of the central bank may already be "taking a little bit of a backseat." By allowing the regional bank presidents and governors to take more control of the Fed, he is signalling that a shift in leadership is underway.

As a result, it makes any new insights contained within today's meeting minutes all the more important. They could shed fresh light on the full board's thoughts as to when it might be appropriate to begin scaling back asset purchases.

But given what the FOMC — and Bernanke himself — said after the last meeting in June, Cummins expects the unvarnished, un-spun meeting minutes are likely to show a strong bias toward tapering their asset purchases.

"Tapering was on the table, but he clearly brought it to the forefront by saying the improvement we'd seen in the labor market up until June 19 seemed sufficient for [them to start] tapering back on asset purchases as early as autumn this year."

So far this year, the three previous "minutes days" have not gone well for markets. However, Cummins is hopeful that we may get "more guidance on the end date of when the Fed can dial back on the entire program."

As it stands now, the Bernanke target to wrap the bond-buying program is for mid-2014, when he expects the unemployment rate will have improved to 7%.

(The Fed's June meeting minutes will be released today at 2 pm ET.)

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