The equity market remains modestly upbeat and it seems like the “inflation every asset” narrative remains fairly intact. Bonds perform, equities perform and even precious metals perform despite a strong USD spot level. Essentially almost everything performs. Interesting times. We opt for a neutral equity to bond weight currently, since the skewed central bank reaction functions will likely keep risk appetite intact. The Fed keeps communicating that they intend to taper the POMO (T-bill) purchases during Q2. Should the current QE psychology take a hit when the Fed decides to taper the POMO purchases (likely in April), then it could risk de-railing the current mildly reflationary market narrative, leading to a further re-flattening of the USD curve, if it resembles the QE3 tapering on a lighter scale. This could re-ignite the issue of weak foreign demand for Treasuries, a strong USD and renewed Treasury inventory building among primary dealers. We may already see early signs of such effects in USD spot and the USD curve, even though it may have more to do with the virus. We lean this way from a risk/reward perspective still and forecast that it could lead the Fed into a cut again in June.