Barclays' assessment of the June FOMC: - The....>

FED: Barclays' assessment of the June FOMC:

- The Fed made a soft shift to QE. Rate of purchases as expected, but we thought

Fed would move more decisively to open-ended buys. Main risk coming into the

meeting was leaving purchase unch., which would likely have led markets to place

some weight on further tapering and, perhaps, an end to purchases altogether.

- Powell framed policy as taking a risk-management approach. His remarks on

fiscal policy suggest FOMC feels additional fiscal support will be needed and

that most members have assumed such support in their forecast.

- Disconnect in SEP: hard to reconcile view of elevated unemployment, labor

market scarring etc with unchanged values for longer-run variables.

- We expect more clarity on Fed plans at the September meeting. We continue to

expect outcome-based fwd guidance, open-ended asset purchases, and YCC on Tsys

with 3 years remaining maturity or less.

- We continue to think YCC is more likely than not, but mustering consensus

might be difficult as the FOMC, in consultation with Fed staff, were not in

favor of this policy following the 2008-09 recession.