*** Fed to release the semiannual mon/pol.......>

FED: *** Fed to release the semiannual mon/pol report to Congress shortly

(1100ET) (Fed Chair Powell giving testimony to Senate next Tue at 1000ET). On

the testimony, TD Securities strategists "expect him to reiterate the case for

gradual hikes on the back of a tight labor market but contained inflation."

Reiterating touch-points from his unscheduled interview on Marketwatch Thursday,

TD said focus will be "on any comments on trade protectionism and the yield

curve along with operational procedures." Now that they are close to achieving

their dual mandate of price stability and maximum employment, the Fed is

"returning rates to a more normal level," Powell said yesterday. However, "if we

move too quickly, then we can unintentionally put the economy into a recession

or cut off the return of inflation at 2 percent". Speaking of recession, the

pace of Treasury yield curve flattening continues unabated, down to levels not

seen in 10 years, with inversion (a recessionary signal) within easy striking

distance. Incidentally, Eurodollar futures strip is already inverting with

December 2019 futures trading below the December 2020 futures -- market starting

to price in increased chances of rate CUTS by the end of 2019.