It was just a matter of time… another big league centrally planned market morning, worldwide #enjoy
The Eurocrats returned with a bang this morning. Forget the Italian (Mario Draghi) … They brought in the lefty French economist (Benoit Coeure) from L’Ecole Polytechnique and the Paris Club de creditors to devalue the Euro and “front-load QE” to this month and next.
In case you weren’t sure, this is the Currency War. And unless you have the timing of each incremental "easing" it's tough to risk manage. Meanwhile, the EUR/USD is right back down to the low-end of my $1.10-1.14 risk range on that. Correlation trades in motion (USD up, Commodities down)
Of course, omnipotent ECB central planners did not like the non-centrally-planned move in Euro Bond yields, hence the intervention this morning. The German 10yr yield is down to 0.61% on the news.
Not to be outdone by the Europeans, the Chinese were at it again overnight, “easing requirements for corporate bond issuance.” The Shanghai Composite Casino? It loved that, jumping over +3% to almost +37% YTD as growth there continues to slow and freak out the People's Bank of China (PBOC).
As I wrote earlier today, “With both the European and Chinese economies now slowing, at the same time, there is only one play in their gravity-smoothing playbook for that: Must ease, faster.”
More to be revealed.
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Editor's Note: This is an excerpt from Hedgeye morning research. Click here for more information on what we offer and how you can become a subscriber.