Ahead of the FOMC early tomorrow morning, there has been a notable improvement in risk appetite evident by a big decline in the VIX (fear) index, alongside gains in equities and a flurry of HG bond issuance. Markets are seemingly becoming more comfortable with the idea that authorities have probably done enough to prevent a systemic banking crisis. The improvement in risk appetite has also triggered a repricing of Fed and ECB rate hike expectations fuelling an aggressive bear flattening of the UST and Bund curves. The USD is little changed in index terms, softer against EU currencies, but stronger vs commodity linked ... (full story)