VIEW: Barclays write that "2 developments.......>

FED: VIEW: Barclays write that "2 developments have altered the extent & timing

of our Fed outlook. 1st, the intensification of financial mkt stress late last

year caused us to remove one 25bp rate hike from our f'cast & project a lower

terminal rate. The 2nd development came in the December employment report. While

the report was solid on virtually every front & affirms our belief that the US

econ will prove resilient to external weakness, the rise in labor force

participation has caused us to revise our outlook in favor of a milder

undershoot of the natural rate of unemployment. While we retain our long-held

view that the participation rate is likely to move largely sideways until the

next econ downturn, the sizeable bounce in participation has pushed the

unemployment rate up to 3.9% in Dec. Labor market conditions at multi-decade

highs should mean that the Fed continues to signal that further rate hikes

remain apt, but our outlook for a smaller undershoot of NAIRU coincides with the

Fed's desire to remain patient. As a result, we push out the timing of the

remaining rate hikes in our official f'cast. In addition to the hike we project

in Jun '19, we exp. additional rate increases in Dec '19 & in Jun '20."