Macro    ECB – Tell ‘em what you’re going to tell ‘em, tell ‘em, then tell ‘em what you told ‘em. Mario Draghi has that presentation formulasorted. Yet in this era of transparent central bank communication, when the first leg starts weeks before the actual “tell ‘em”stage, surprises on the day are rare. So, surprise, surprise, the ECB expects to unveil its quantitative easing exit next month. Andthe euro’s exchange rate is “very important” for growth and inflation. Beyond words, the numbers were only moderatelysurprising. The ECB cut its 2019core inflation forecast to 1.5per cent and left 2018output growth unchanged at 1.8per cent,from 2.2per cent this year. With no nasty surprises, investors yesterday resumed their euro buying frenzy. Stopping them mightrequire Mr Draghi ditching his favoured presentation formula to surprise markets in October.    Strategy    Treasury yields – History often repeats but doesn’t always rhyme. Eye-catching bond market moves this week sent ten-yearTreasury yields to their lowest since President Trump’s election. Amid the rally, the ten-year and two-year yield differentialplunged to a decade-low 75basis points. A similar yield-curve flattening last year also culminated with the 2s-10s at 75basispoints in July. But whereas that move saw yields on both maturities fall sharply, this year’s flattening sees two-year yieldsvirtually unchanged. Why? As last year’s economic scare began, the two-year yield was 65basis points above the Fed funds rate.Investors cut this spread in half as they priced out future Fed rate hikes. Now, two-year yields are already approaching the Fedfunds target rate implying minimal future rate hikes are anticipated. The yield should only drop further if investors startconsidering interest rate cuts.

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