### EXCLUSIVE: Peter Palfrey, co-portf......>

US TSYS: ### EXCLUSIVE: Peter Palfrey, co-portf. mgr of $6.5B Loomis Sayles Core

Plus Bond Fund, told MNI exclusively he does not expect a "taper tantrum" as Fed

starts to trim balance sheet holdings of Tsys and MBS bought for Q/E purposes.

He believes Fed will announce Q/E Taper details at Sep. FOMC mtg with "start of

the bal.sheet reduction in Oct. For the first 3-mo period, the Fed has guided

mkts toward a $10 bln monthly reduction in reinvestment of SOMA portfolio cash

flows: $6 bln reduction in USTs and a $4 bln in Agency MBS," he said. "That

total monthly amount will increase by $10bln in aggregate each qrtr, reaching a

maximum of $30bln in USTs and $20bln in MBS by the last qrtr of 2018" 

- Palfrey believes financial markets have "largely discounted this gradual and

mechanical reduction in the reinvestment of balance sheet cash flows and we do

not anticipate much lasting dislocation in rates or risk markets due to taper,

nearer term, once the program is underway." He said while Taper start "seems all

but certain this fall, and is likely to proceed on schedule through the end of

next year, the pace and timing of any additional policy tightening will depend

on the upcoming data and upon the Fed's assessment of fincl conditions."