The fragile state of the American economy and the euro zone’s surprise resilience could leave the European Central Bank as the lone hawk among major rate-setting institutions. Investors can benefit from the split by favouring the euro and European equities. Yields on 10-year U.S government bonds have dropped by 17 basis points to 3.62%, while equivalent German sovereign debt yields 2.29% – 15 basis points less than at the start of the year. By November it could be down to 150 basis points. On Feb. 2 the European Central Bank increased its key rate by 50 basis points to 2.5%, its fifth successive hike.

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