The conundrum that everyone is wrestling with is the euro and yen's strength given their negative interest rates and prospect for even lower interest rates. The divergence of monetary policy, even if the Fed is on hold for the rest of this year and next, should be dollar-positive. We have tried making sense of what is happening by separating the developments into two buckets. The first bucket, and what we think is the medium and long-term driver is the divergence of monetary policy. The German and Japanese yields through eight or nine years are negative. Positive returns are offered in the US. This creates an ... (full story)