Wrightson ICAP's assessment of June.............>

FED: Wrightson ICAP's assessment of June FOMC...makes points on MBS/repo rates:

- SEP provided more than an adequate substitute for explicit fwd guidance; sent

message Fed wanted to convey, while simultaneously leaving open possibility of

switching to another policy path if economic trajectory shifts.

- Powell was widely described as being "noncommittal" on YCC; we would have

described him as "unenthusiastic" about the concept. A hallmark of Chair

Powell's tenure has been a healthy scepticism about fashionable macro-theory

memes. It is not a foregone conclusion that Fed will adopt a YCC framework.

- Announcement on continued offering of "large-scale overnight and term

repurchase agreement operations" suggests that the Fed does not feel any urgency

to discourage participation in its repo ops by boosting the minimum bid rate.

- Some headlines said Fed intended to buy MBS at current pace, but statement

specified it would increase holdings at recent pace - a slightly different

concept. If prepayments pick up, the Fed will boost buys to offset principal

paydowns. I.E. this month, NYFed buying $96bln MBS, but vs $56bln principal

repayments. Gross buying plans will evolve in response to expected repayments.