Other than to sell , the markets will continue to struggle for direction as investors don’t seem to think the Fed knows more about the implications of the virus than they do. So at this early stage of the policy game, I think what we’re seeing is an unwinding of defensive hedges rather than a reversal of sentiment
The was all about providing a backstop for the stock market and buying some time for the G-7 policy markets to better quantify the Virus effect before ballooning deficits, which are much harder to reduce than expand.
And while skeptical voices have been heard overnight regarding the lack of traction that monetary policy has at this stage (late in the policy cycle, this is all about supply so far, not demand.) It’s never a good idea to take on the Fed when they shift into easing mode.
The ECB is widely expected to by 10bps to -0.6% on 12 March – if not earlier –. The ECB action could include TLTRO…