Monday saw Goldman Sachs note that......>

MARKET TALK: Monday saw Goldman Sachs note that "besides traditional rates cuts,

central banks may also consider YCC. We think the central bank most likely to

implement the policy this year is the BoC, likely out to 3-5 years. The Fed has

also raised the possibility of using YCC to tgt rates. Our economists think that

in order for YCC to be effective, the Fed would have to cap rates 4 years out at

a minimum. This is akin to the RBA's adopted YCC out to the 3-year point. But at

present, we don't exp. the Fed to move to this policy before having more clarity

about the outlook. The RBNZ hasn't discussed YCC publicly & appears to prefer

QE, at least for now. Still, our economists wouldn't rule it out down the line

if other policy tools were exhausted. Given the RBNZ's preference for not

holding more than 50% of the NZ bond market, if it looks like they are going to

breach that target they may consider switching to YCC (similar to the BOJ).

There hasn't been much discussion on YCC by ECB, BOE or Scandi central banks.

For the ECB, while it's unlikely the bank would adopt an explicit anchor for LT

yields for a variety of reasons, we think in the course of their QE program, the

bank may attempt to limit upside risks to bund yields."