That has sustained the U.S. bond market, which in turn has propped up U.S. equities. Higher Japanese rates would mean a stronger yen. This might lead to the Japanese trying to get out of U.S. bonds in a big way, resulting in a sharp correction in equities. Germany s recovery is the most eye-catching story for global equity investors. France is behind Germany in the cycle.
Unemployment is still very high.
Britain is in limbo with elections pending and a likely change of government. The economy is slowing and we might see some more interest rate hikes. But Germany s momentum will pull others along. So six months from now Europe will look in much better shape. As for stock markets, Switzerland and the Netherlands are overvalued.