The Fed is accordingly expected to proceed cautiously at least initially. In part for that reason our fixed income and FX strategists have only a modest further increase in bond yields and the USD in their forecasts for next year. They project 10Y US Treasuries rising to 2.65% and the USD to 1.02 vs the EUR. The dollar is expected to strengthen more aggressively against both the GBP and the JPY, but even so the gain in the currency overall has been frontloaded into 2016. Our economists and strategists are cautious partly because the fiscal stimulus is expected to have only a modest impact on growth, at around 0.5% of GDP. That is based on the assumption that some of the proposals will get watered down and that the tax cuts have a relatively low fiscal multiplier. Our US economists think that should the fiscal stimulus be larger and more effective (for which read more infrastructure) then US growth could surprise on the upside to around 3% in 2017 and 3.5% in 2018. That in turn would mean a more aggressive Fed and in all likelihood a bigger rise in yields and the USD. Chart 15: BofAML sees GDP accelerating into 2018... Chart 16: ...with inflation picking up too m Global GDP growth % m DM GDP growth % m EM GDP growth % m Global CPI inflation % m DM CPI inflation % m@ EM CPI inflation % 42 ig 54 56 56 38 4.1 41 ss 38 28 3 3.2 3.1 25 24 1.8 24 1.7 1.9 15 17 0.7 0.3 2015 2016F 2017F 2018F 2015 2016F 2017F 2018F Source: BofA Merrill Lynch Global Research Source: BofA Merrill Lynch Global Research Reversal: There is good taper and bad taper The outcome of that would likely affect ECB behaviour too. Our central expectation is for Euro Area growth of around 1 %% and inflation nudging only modestly higher. A much more robust global economy and a stronger USD (presumably weaker EUR} would likely put upward pressure on both of those. Indeed, in such an environment it is not impossible to think of 10Y Treasuries pushing through 3% and the USD breaking parity against the EUR. Tha