European and UK economic reports have beaten expectations showing improving momentum. Notwithstanding the intense uncertainty related to Brexit, political stability has improved significantly in the UK with the strong leadership by UK PM May. This includes recently backing the head of the Bank of England, Carney, to remain at his post for longer. Political deadlock in Spain has been resolved with Rajoy forming a minority government. No doubt major risks remain in Europe and the UK related to Brexit, the financial stability of several banks, an Italian constitutional reform referendum on 4 Dec. However, the UK and Eurozone yields have risen significantly in the last month or so, tending to lead the gains in US yields and rising significantly against flat Japanese yields, in part on improved economic performance and higher inflation expectations. Higher yields and a sense that political uncertainty is more clearly priced-in may attract capital inflow to EUR from the USD and JPY.”