Anders Svendsen at Nordea believes that.....>

US TSYS: Anders Svendsen at Nordea believes that "Risks are skewed to the

hawkish side at next week's FOMC meeting: the dot plot is likely to show four

rate hikes this year and Chair Powell has appeared more hawkish than his

predecessor. However, short positions in US bonds are already stretched."

- He points out that the markets are only pricing in 3 hikes and that a fourth

hike in the dotplots will mean that the markets have some catching up to do.

- Perhaps more importantly for the long end of the Tsy curve "FOMC members could

argue that parts of the tax reform will lift the growth potential in the longer

run". However, Svendsen says that the market has front-runned the rise in R-star

noting "5y1y rates have traded around 3.25% against the Fed's longer-run

interest rate at 2.75%".

- Yet because of short positioning Nordea see risks tilted slightly to the

downside for 10yr treasury yields in Q2 as key data tend to deteriorate in

second quarters.