For perspective, the point at which the S&Ps sold off yesterday was from 16% higher than the 200 day moving average, the exact same percent as it stood on September 2nd.
SPX, 200 day in yellow
Based on comments from a Bank of England member and a story on the ECB, at least these two central banks are guaranteeing that they will overstay their easing welcome even though we are on the cusp of mass vaccine inoculation. So notwithstanding all the 2020 easing that took place because of Covid, there is no intention of pulling back without Covid. This again is known as asymmetric policy. BoE member Michael Saunders, who is a big time dove, said there “may be some scope to cut the Bank rate further” which means below zero. They still haven’t figured out that NIRP is a tax on bank capital.
With respect to the ECB, Bloomberg is reporting that they may extend QE to the middle of 2022 somehow expecting a different outcome after all these years of trying even with a vaccine even though that vaccine is the greatest economic stimulus method we can possibly have. This still can’t stop the euro from powering on as it is now approaching $1.22. The dollar index is down for the 4th straight day to a fresh multi yr low at about 90.5.
On the OPEC deal, the front month WTI crude contract is rallying to the best level since early March. I continue to expect it to go higher, particularly when those vaccines hit your local drug store.
Jan WTI contract