BA/ML strategists Ralf Preusser....>

US TSYS/RESEARCH: BA/ML strategists Ralf Preusser and Shyam Rajan said that

"with GDP tracking 2.8% for Q3 despite the hurricanes, and global growth data

showing continued momentum, we believe the path of least resistance remains to

higher rates."

- They expect the US front-end, "which has led the selloff since first week of

September,  to take a breather, with a Dec hike sufficiently priced and the 2018

re-pricing on hold 'til there is more clarity on the Fed transition" so "yield

rises are likely to lead to steeper curves."

- They added that "ultimately, the next big move for both rates and the curve

hinges on tax reform. This will now come down to the Senate passing its budget

resolution and the conference with the House thereafter - while the budget is

largely meaningless, getting it passed is a prerequisite condition for passing

the tax bill through reconciliation."