President Obama showed his opening gambit for the budget negotiation. He is calling for a €1.6T in additional tax revenue over the next decade, double the amount that was on the table in the failed talks of mid 2012. He however left the door open for spending cuts in some mandatory programmes like Medicare. A spokesman for Mr. Boehner, the main Republican negotiator, dismissed the president’s position. We don’t draw conclusions from these comments. There will from now onwards be a lot of statements as parties are starting to dance about the issue and looking for points to score. It is of course for markets the main focal point for the next weeks. Disappointments on the progress of the talks are intrinsically positive for bonds and negative for equities. However, markets know very well that all these statements fit into a political negotiation in which a success or failure are only visible at the very end of the talks.