### POV: EXPECT QUIET TRADE CONDITIONS IN.......>

FED: ### POV: EXPECT QUIET TRADE CONDITIONS IN LEAD UP TO WEDNESDAY FOMS ANNC

Baring some politics related tail event in lead up to Wed's FOMC, .25bp hike

expected and fully priced in. Focus will be on the Summary of Economic

Projection (SEP) dots followed by Fed Chair Powell's first press conf

- Sidebar on SEP: the NYFRB published research recently covering a potential

projection substitute called Dynamic Stochastic General Equilibrium (DSGE)

model. According to the research team the "model's forecasting accuracy to be

comparable to that of private forecasters, and notably better for output growth

than the median forecasts from the FOMC's Summary of Economic Projections."

- Amid much speculation of dot-plot leaning towards 4 hikes in '18 as economy

strengthens, last wk's weaker than expected retail sales (-0.1% vs. +0.4% exp)

should temper expectations especially w/1Q GDP est down-revisions (Atl Fed to

1.8%). While the Tsy curve continues to flatten to new 10-year lows (2s10s at

54.8, 5s30 at 42.9), the Fed should be in no hurry to hike excessively this

year, dots likely to show 3 hikes for 2018 as Fed maintains a gradual approach

under Fed chair Powell's tutelage.