With continuing access to short-term funding, notably in deposit and money markets, banks in GIIPS and even some non-GIIPS countries increased investments in GIIPS sovereign bonds so as to purchase “carry” over the German Bunds, hoping for future convergence of yield (Acharya and Steffen, 2015).
The economies of our North American neighbors, Canada and Mexico, appear to be expanding at a solid pace. Especially significant have been signs that Japan could be emerging from its protracted slump and its battle with deflation. In the euro area, expansion has been somewhat modest by global standards, but recent indicators suggest that growth could be strengthening there as well.