So far, equity markets are grinding higher, pushed by better-than- expected U.S. data resisting fiscal headwinds. Rates have re-emerged as a major driver of currencies. The ECB may yet cut rates but the reality is that, after such a move, we would return to trading currencies in a zero-interest-rate-policy (ZIRP) world, with far less volatility and a market much more controlled by Central Banks, just like before the rise of Abenomics. Watching the Bund/Treasury spread is important. A notable development lately has been the rising premium investors charge to own treasuries over bunds. The current spread of +57bp is ... (full story)