Summary of NatWest's call for FOMC, seeing......>

FED: Summary of NatWest's call for FOMC, seeing open-ended QE today:

- SEP: May get alternative economic scenarios given unclear outlook. FF dots =

no change for the forecast horizon, could also see longer-run dot reduced.

- Fwd guidance: Do not see strengthened at this time but will be more aggressive

down the road. Possible Fed will tie it to a specific date or metric (i.e. infl,

unemp), but believe they will leave open-ended due to uncertainty of the

outlook. Date-based not particularly useful given market path of rates. Could

tie to progress on inflation though: once policy review concluded.

- QE: To buy ~$100bn a month Tsys/~$80bn MBS, open-ended. Not announcing a

formal program would introduce unnecessary uncertainty into the market

(continued tapering could lead to expectations that purchases will end).

- Purchases could be announced one month at a time; announce desired maturity

distribution but with option to modify as warranted. Flexibility could help with

rolling out YCC later this year. However, allocation by duration buckets

unlikely to be as extreme as in QE3.

- YCC: Sept. more likely; anchored with unlimited buys of 5yr Tsy at ~0.25%.