The first one is the situation in crude oil. Namely, it plunged below $30 overnight as Saudi Arabia ramped up production following Friday’s OPEC+ collapse. At the same time, treasury yields plunged to fresh record lows and the USD Index plunged once again, moving very close to its 2019 lows.
The current market expectations regarding the upcoming Fed meeting are very dovish.
The rates were just slashed by 0.5%, and yet – today – people are expecting the Fed to slash rates by either another 0.75% or (most people) another 1%.
Low crude oil price are generally positive for the US economy as this implies lower production costs. So, why would people expect the Fed to take VERY aggressive measures now?
People’s fear of the coronavirus as measured by the search interest in “coronavirus” has gone through the roof – it’s over 5x as big as the interest in “ebola” was in 2014.
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