VIEW: Goldman Sachs note that "recent...........>

FED: VIEW: Goldman Sachs note that "recent comments from Fed officials suggest

that no major changes are imminent at the June FOMC meeting, but we expect three

steps down the road.

- First, we expect the FOMC to transition to a traditional asset purchase

program, settling on a steady pace of roughly $80-120bn of UST and $25-35bn of

MBS purchases per month.

- Second, we think the FOMC is most likely to choose outcome-based forward

guidance that delays liftoff roughly until the economy reaches full employment

and 2% inflation. This would be more dovish guidance than offered last cycle,

but it appears most consistent with the new average inflation targeting strategy

that we expect to emerge from the Fed's framework review.

- Third, we expect the FOMC to reinforce its guidance with front-end yield curve

control, capping interest rates out to a horizon somewhat short of the date when

the Committee forecasts its liftoff criteria will be met. This would ensure that

market pricing remains consistent with the FOMC's plans, even if investor

expectations become unrealistically hawkish as growth picks up."