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Charts for January 2015 - Should the Fed tighten?

SP 500 relative to IEF Treasury Bond Fund at 2007/2008 (extreme?) levels
JNK US High Yield Bond Fund vs. LT Treasuries - Credit spreads widening
10 year T-Sec Yield vs EURO Stoxx 50, MSCI Italy, and Spain Index Fund ETF
Euro stocks coming under pressure as LT US T-Security yields trend down
USD Emerging Market Bond Fund vs JNK - Moving (Falling) in tandem
The rise and potential technical breakout in the Dollar Index
Coinciding with the dramatic decline in Oil
Euro/US vs Oil
Rapid declines after ECB June rate cut into negative territory
Differential between real German Bond Ylds and real US LT T-Bond Ylds-
Flight to German bonds and falling Euro FX suggest currency revulsion?

Japanese Yen accelerates it's decline along with the Euro
Will the trade deficit follow the CPI lower?
Is this a sign that the dollar conditions outside the US are tightening?
Inflation expectations are heading lower, but still within the multi-year range.
Will this break down below 2011 support or bounce?

Takeaways:

 1.  Dollar financial conditions are tightening outside of the United States.  This should be expected given the level of real risk free interest rates offered in the US relative to those found in the rest of the developed world.  I suspect that if this yield differential were to close that the upward trend in the dollar index may reverse or at least decelerate/consolidate.  This remains to be seen especially as the front end of the US yield curve is only just showing signs of breaking down relative to the long end.  It will likely depend on the perception of Fed policy (timing of first rate hike) relative to the stance of monetary policy found in other developed countries (EZ - QE).  

 2.  US high Yield bonds, Emerging Market bonds, EZ periphery stocks, and US LT T-sec yields are all falling in tandem.  This suggest that a flight to quality is taking place especially when considering the decline in German bond yields.  German rates are negative from 1-month to 5-years.
  
3.  The US dollar is leading the way weighing down on Oil, Euro, Yen, and likely inflation and inflation expectations.  Yet, major US stock indices are still close to all-time highs and above December and October 2014 support levels.  Will this remain the case if the aforementioned trends continue? 

 Conclusion:
Will the Fed really tighten if these trends continue into the rest of 2015?

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