Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
As widely expected the Bank of England added to their QE program, to the tune of 50B pounds. At about the same time China announced a rate cuts as well…
Benchmark lending rates will be lowered by 31 basis points to 6 percent, and deposit rates will be reduced by 25 basis points to 3 percent.
The combination of these 2 actions took futures from flat to up about 0.3% as I type. Mostly because the market is so over stretched to the upside and the BOE action was expected. The Pavlov reaction to buy on any easing is never ending.
Now the world awaits the ECB’s action.
Keep in mind the ADP employment report and ISM non manufacturing come later today. The latter is far more important to the U.S. economy then ISM manufacturing (since mfg is only 12% of the economy) and if most of the troubles seen in the ISM manufacturing report are due to Europe, should be a far better number than we saw Monday. That said we are in a “good news is good news and bad news is good news since it means QE” period.
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