### POV: FED BOND BUY SPREE MEANS 5/30Y.....>

US TSYS: ### POV: FED BOND BUY SPREE MEANS 5/30Y MOVE TO 10YR FLATS DOESN'T WARN

OF RECESSION:

- Fed's trln-dollar bond-buy spree after 2007-08 financial crisis distorted

5/30Y Tsys yld curve flattening meaning. 5/30Y curve flattened Fri  to 10-yr

tights of +64.70 bps.

- If Fed raised rates a lot, it used to lift other US interest rates and

eventually squeeze. "But this is a very different environment," like 2004 when

"Fed raised short-term rates, but other rates did not go up," said a trader.

- This flattening is more "a reflection that you could get asset bubbles" amid

too-cheap rates for normalizing ecoknomy, he added. "This does not tell you what

the yield curve used to mean. You can't just get to flat (0 bps) yld curve, and

think, 'That is going to cause a recession.'"

- View may change years down road "if Fed eventually gets the FFR rate up to

2.5%," he added. "But, the neutral FFR may end up being higher than it was

historically. And if this tax reform plan gets thru Congress, this will change

the face of the economy."