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MUFG rates strategist John Herrmann said....>

US VIEW
US VIEW: MUFG rates strategist John Herrmann said FOMC still "needs to clarify
one last item: Sloppy-Steep vs Orderly-Flat? The FOMC inched closer to tapering
its bloated Balance Sheet" as said Wed "balance sheet normalization may commence
"relatively soon."
- He said FOMC said monthly schedule pace of Tsy runoff/taper/shrinkage (w/
escalating "cap" structure until $30B cap attained), and indicated likely
Bal.Sht Normalizatn start: "likely formal anncmt on Sept.19-20 Mtg" with a Oct.
1 start date," it has not said if "maturing principal reinvestmnts" will follow:
- "'Preexisting" schedule over 2010-17 (allocate reinvestmts into matrty buckets
in proportn to Tsy's cpn maturity structure), 
- Or "'New" sched: concentrating reinvestmts in front-end to "steepen" curve
"(or to allow a faster pace of Balance Sheet runoff over yrs 2020-26), or
concentrating reinvestmts in back end" to "flatten" curve, "lock in low interest
cost, provide ongoing support to the recovery etc." He suspects Yellen will
retain "preexisting program of reinvestments in proportnl Tsy maturity cpn
buckets."

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