/EGBS: And MUFG rates strategist...>

US TSYS/RESEARCH: /EGBS: And MUFG rates strategist John Herrmann adds on Sept.

7th, ECB chief Draghi "may announce his plan to 'taper' the pace of asset

purchases over the first 6 months of the year 2018, from the current pace of E60

Bln of securities per month. Should Mr. Dudley's view of the 'tapering risk'

prove to be correct: that is, an absence of a taper tantrum from either the ECB

or the FOMC's announcements in September or early October, then, according to

our models forecasts, the US economy likely will remain on its current path for:

economic growth, inflation, employment growth and the U3 Unemployment rate over

the remaining balance of the year 2017 through the year 2018 into mid-2019."

- Herrmann said "if the US economy should perform as outlined by our models

forecasts for the years 2017, 2018 into mid-2019, then our models suggest that

there are risks that the FOMC continues to gradually hike the target range for

the federal funds target rate over the coming 21-months at a pace that is FASTER

than forwards markets participants are willing to price in, and to a "neutral

rate level" that is higher than forwards markets are pricing over the coming 3

years."