Most FOMC folks keep telling us that economic conditions are strong enough to warrant a December hike. What gives? Two possible explanations for the strength in bonds. First, the feedback loop between the Fed and the US$ is such that a significant tightening in monetary conditions is already at play and could impair US growth in H1/16. Second, the Fed is at the mercy of the ECB. The Fed is well aware of the US$ drag on growth but Mr. Draghi will be on stage first next week, while he keeps hinting at more policy stimulus. This is driving foreign investors to buy US$ bonds. Next week is a key week. Further US$ strength once the ECB has delivered could be upsetting. Stay tuned!