Investment Strategy from Global Monetary Policy Divergence?

1. Most likely Scenario

 1) FED : Rate Hike in December
 2) BOJ : No Action as Additional Gov't Spending is more likely
 3) ECB : No Action because of relative easing condition as FED could start tightening and BOJ maintains policy, or Small Easing as the Last

2. Risk Factor

 1) FED, Showing division of Yellen, Fischer and Dudley again.
 2) ECB, Draghi
 3) Oil Price - Additional downward pressure

3. FX Market

 1) USD : Moderate appreciation amid increasing demand for CNY as a SDR currency
 2) EUR : Limited weakening further under expectation for the end of easing...
 3) JPY : Continuing range movement between disappointed monetary condition and global risk appetite.
 4) Risk
  - If Fed turns out dovish again, EUR could be strong against USD
  - If Draghi turns out mad explicitly, EUR could try equivalent price to USD
  - If Fed tightening leads tumbling oil price, EUR and JPY could be more weakened

4. Bond Market

  - USD yield curve could be bearish steepened as economic sentiment improves
  - German bund yields spread could be more widened, but will not be significant
  - Peripheral countries' spreads in Euro area remain somewhat narrow
  - Credit spread could be lowered with a risk appetite, but limited under the burden of issuances
  - Risk : Considering above possibilities, USD bonds could outperform residential DM bonds as USD yields turn to lower / or considering Draghi issue, spread between USD and EUR could wide further

5. Investment Strategy
  - Maintain OW USD bonds versus EUR bonds
  - Maintain Short Duration and Yield Curve Steepeners
  - Maintain OW peripheral bonds versus core countries in Euro zone
  - Prepare risk hedging to short EUR against USD
  - Increase credit position moderately : CMBS, SSA, and some pipeline corporate bonds