###POV: (clarify) RISK OF MARKETS PRICING IN....>

FED: ###POV: (clarify) RISK OF MARKETS PRICING IN MORE FED RATE HIKES IN 2019?

- MNI PINCH calculates only 29bp FOMC rate hikes in 2019, that is just over 1

full 25bp rate hike for the whole year, with the curve looking very flat

compared to the Fed's own median dot plot curve of there being 75bps worth of

hikes in 2019.

- The Fed is widely expected to leave rate and monetary policy unchanged at end

of today's meeting, but markets are fully pricing in a 2nd rate hike of 2018 at

the June FOMC meeting when updated projections will be released.

- Indications from recent data point to US GDP will continue to push higher as

Europe takes a breather and that inflation in the US has some momentum to the

upside. Core and headline PCE has risen to 1.9% and 2.0%.

- The risk is that today's FOMC statement could be on the slightly hawkish side

especially on level of inflation which could lead to increase in higher interest

rate expectations for 2019 where markets would need to price in 2/3 hikes rather

than 1/2 currently. Its also difficult to see how forward interest rate path

could move even lower/flatter and price in less then 29bps of hikes.