As a result of the recent spike in yields, and surge in the dollar following the Trump victory, the market's reaction has been to assume that this is a harbinger of rising inflation due to a tidal wave of "imminent" fiscal easing, and has accordingly pushed up the December rate hike odds to above 90%. After all, the logical offset of the expected easing in fiscal conditions is for the Fed to tighten monetary policy, arguably the only source of market gains (and economy support) over the past 7 years (a good read on "monetary offsets" can be found here).

But is the market wrong?

After all, just today the BIS issued a warning that the stronger dollar - far from an "all clear" signal of confidence in the economy, may simply signal far greater financial system risk as a result of a substantial global dollar funding shorage.