S&P, Dow futures flat as Fed minutes awaited

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The central bank is projected to raise rates once more this year though investors are concerned about the recent set of tepid economic data and inflation, which remains below the 2 percent target. For the euro and European bond markets, investors await the European Central Bank (ECB)'s June policy meeting minutes due later today. In her June press conference statement, Yellen noted that inflation had been driven lower by "one-off reductions" including declines in wireless telephone bills and prescription drug costs.

"It's very clear that the Fed wants to remain vague", said Lindsey Piegza, chief economist at the financial firm Stifel Fixed Income.

"These participants expressed concern that such a path of increases.might prove inconsistent with a sustained return of inflation", according to the minutes. "With regard to the outlook for inflation, some participants emphasized downside risks, particularly in light of the recent low readings on inflation along with measures of inflation compensation and some survey measures of inflation expectations that were still low", the report said. The labor market is strengthening, while business investment and consumer spending appear to be recovering from recent lows.

Bond investors also are paying attention to the timing of reductions to the Fed's bondholdings, as the prospect of a large buyer of Treasurys leaving the market could lift yields for USA government paper, further tightening policy.

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There is increasing evidence that financial conditions will play an increasingly important role at the next few meetings and there was a discussion at the June meeting as to why financial conditions had not tightened following the increases in the Fed Funds rate. They did raise rates in March and June, but are considering the new strategy for several reasons. Some of the more highly valued stocks on Wall Street were falling on Wednesday, but the overall market was relatively flat.

The Federal Reserve is figuring out when to start unloading much of its $4.5 trillion in bond holdings, a major turning point for an economy still healing from the 2008 financial crisis.

"With the mixed tone from the minutes and the essential delay to the announcement of balance sheet reduction timing, there is no surprise why we are seeing the muted reaction from the markets", said Jingyi Pan, a market strategist at IG Asia Pte. It has since deferred the aim twice; the current objective is to meet a late 2017 deadline.

"I don't think anyone views Janet Yellen as an expert stock picker, but she's got control of one of the key variables that determines a lot about asset valuations", Stanley said. Several committee members preferred to announce a start to the process within a couple of months, while others argued for delaying the decision until later in the year, to continue to judge the economy's progress.

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