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Message From: Sent: To: CC: Casriel, Lyle 6/20/2019 5:26:54 PM 'G Max' I j; Stackman, Scott I I; Tomkiewicz, Jessica II; McNamara, Sean [ j; Klein, Matthew I I Subject: F0MC Meeting and potential rate cute in July Attachments: US Economic Perspectives_Forecast change.pdf Scott, Hope you are well. Given our overwhelmingly patient view on rates for funding the munis, we wanted to provide you with an update on UBS's thoughts around a potential rate cut. We have included a few bullet points below as well as attached our most recent piece on the FOMC meeting. The good news is cash is now yielding more than bonds. The FOMC statement and presser point to 50 bps in cuts—probably July In the press conference, Powell noted that even the FOMC participants that did not call for a cut say that the case for a cut has risen. That view adds to the likelihood of a rate cut this year. The bar now is low for a rate cut. Powell did say in the presser that they look forward to learning more about the economy. Powell re-emphasized that they want to react to trends, not single data points. Pushing things off past July is clearly possible if we get our forecast. But the shift in sentiment makes July seem more likely. The reaction function has shifted to risk management We knew all along that they care about managing risks. We had always expected them to err on the side of hiking too little rather than too much. But they have gone further and now seem to want to cut despite growth being above their estimate of potential growth. Partly this shift reflects risk management being more important, partly their further downward revision to inflation. Look for communication to resolve July versus Sep The Committee is clearly split, but also clearly has a lean to cut. We think the data will not support a cut, but there are many ways to be wrong and the Committee is in risk management mode. The FOMC does not see a material difference between July and September from macroeconomic grounds. They also see much more weakness for H2 than we do. A cut is not a done deal, but they have clearly shifted. Thank you Scott and Lyle Stackman I Casriel Group Barron's Top 50 Private Wealth Management Teams Barron's Top 100 Advisors Financial Times Top 400 Financial Advisors Forbes Best-In-State Wealth Advisors UBS Private Wealth Management 1285 Avenue of the Americas. 38th Floor New York NY. 10019 T C F CONFIDENTIAL UBSTERRAMAR00004363 EFTA00239642 lutp://financialsenicesinc.ubs.comlicam/suclonancasricil Disclaimer Mace VISII our website at htim4financialterincesincdtbs.crimirealthEanaddrsclauner.html for important chiclostires and mfiirmatton about iv r e ma I pollens. For your protection. please do not transmit onion or instructions bye-mad or include account numbers. Social Seaway numbers. credit card numbers. passwords. or other personal mfarmaston. (MS requires that any orders sent by email he verbally confirmed orden sent by email alone will not be executed The tiliamation contained herein has been obiaated fiver sources believed to be reliable. we cannot guarantee its accuracy or completeness neither the information nor any opinion expressed emu tantes a solicitatron for the purchase or sale cf any security. This adannation is being provided as a service of your Financial Advisor and does nn supersede or replace your monthly UV Financial Services inc. customer statement. Please be advised that inflames ion penalising to trades of any securities a not an official auruatuon confirmation. The official confirmation of any transaction will be sent to yen basedon put delivery preferences. UBS e-Delivery: easy. efficient. ecosmart. Secure. http://financialservicesinc.ubs.comiteann/stackmancasriel/ Please be advnal that this e-mail is nut an official tranimetion confirmation. The official confirmation of this trammitionWill be sent to you via Mph( mail. CONFIDENTIAL UBSTERRAMAR00004364 EFTA00239643