Despite positive noises on wages from both the Fed and the ECB there is little sign we’re returning to the ‘normal’ economy of old, where tightening labour markets lead to quickening inflation. And even if it did we maintain there is plenty of hidden labour slack, even in the US. The Eurozone (EZ) is five or more years behind America in eliminating its own worker surplus. More worryingly, the EZ economy is vulnerable, being more exposed to trade wars, the China slowdown and Brexit. The Fed looks far more on point in responding to challenges than the ECB. We remain short euro versus the US dollar and maintain long German bund and 2-year US Treasury positions in the fixed income space.