Indeed, negative yields are rampant: German government yields have broken below zero all the way out past five years to maturity and negative yields exist in France, Netherlands and Austria to list a few. Other European bonds yields have collapsed. Italian 10-year yields, which were above 7% during the 2011 European financial crisis are now just 1.4%. And the Swiss National Bank cut its official rate to negative 0.75% on January 11 to dissuade capital flows into its market. As a result, some short term Swiss Franc yields are now below negative 1% and even 10-year government bonds yields are slightly negative. The entire Japanese government bond curve hovers in a netherworld around zero, with negative yields out to two years.

Zero is no longer the norm in developed markets. But while the causes of the move up away from zero in the U.S. and the move through the zero floor in Europe and Japan are clear - that is, divergent economic conditions leading to divergent monetary policy - we are more interested in the implications of this divergence; for both markets and investors:

1. The U.S. dollar should continue to rise. The end of U.S. quantitative easing coupled with the expected beginning of European QE (and accelerating QE in Japan) were the engine for the dollar's increase versus the euro and the yen in 2014; interest rate differential will be the driving force in 2015.

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