Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

A Rush Of Stimulus Is Giving Markets Breathing Room, But For How Long?

By Stephen InnesMarket OverviewMar 30, 2020 04:26AM ET
A Rush Of Stimulus Is Giving Markets Breathing Room, But For How Long?
By Stephen Innes   |  Mar 30, 2020 04:26AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items


Massive monetary and fiscal spending is giving investors just enough breathing room to figure out the extent of the economic damage done. However, that oxygen supply is rapidly depleting with increased US COVID-19, and global case counts. To that end, Asia markets are trading on the back foot today as risk appetite wanes, pointing to more turmoil ahead.

However, it was the fall in oil prices that triggered a more broad-based cross-asset sell-off after the WTI front-month contract fell below the key $20/bbl at the Asia open. Fortunately for risk sentiment, the breach of that psychological level didn't lead to an even deeper dive in prices.

Prices are tentatively stabilizing, and risk is turning back on again as market makers are back replenished their shopping list of go-to equities. But the week is still young as the oil market faces an unprecedented demand-supply shock that is challenging oil storage facilities. At the same time, Saudi Arabia and Russia show no signs of returning to negotiations to cut output.

It's so difficult to gauge these markets as it's taking minimal volume to move the market these days.


The central Bank policy deluge seems to be suppressing FX volatility for now in what was expected to be a raucous quarter-end. But as risk is showing signs of turning back on, as such, the USD is giving back gains in lockstep into the London open.


"Nobody ever accuses a firefighter of using too much water" – Stephen Poloz (Bank of Canada Governor)

The PBoC showered markest with liquidity today after surprising when The PBoC conducted a CNY50 bn 7d reverse repo operation at 2.2% today, down from a 2.4% rate in its last operation more than one month ago. The government is attempting to minimize the impact of the coronavirus. But given that the negative shock to the Chinese economy could be unprecedented, however, the amount needed to avoid a severe slowdown and sharp increase in the unemployment rate is far more enormous than what they provided

This did but shouldn't have come as a surprise after the global central banks hosed down the market with liquidity. But the PBoC could have done more from my seat and are still being too conservative with monetary easing relative to their counterparts at the Fed. The world expects them to do much more since everyone else is paying the massive health care bill for a virus that started in China.

This policy move fits into the thanks for showing up category relative to other central bank's efforts and little else, especially with the market in policy fatigue; they needed to shellshock.

Some are reading this; however, as the start of a fresh round of easing and expect the central bank to shift/guide the whole curve Well, the PBoC will have another chance to do what's right as there is CNY200 bn of MLF due April 17, which falls just before the scheduled April 20 Loan Prime Rate fixing and provides the PBoC with an appropriate opportunity to shift the medium and long-term rates lower.

Gold markets

Gold doesn't want to let go of the distressed sales narrative, and this may be getting compounded again this week by the CME increased margin requirements. Which could be accelerating the need to pare positions

Oil markets

Oil prices fell another $ 2.00 in Asia. Still, it remains challenging to call a floor as the horrific news flows are providing inferior optics as storage capacity is expected to fill to the brim with the world in lockdown.

With social distancing impacting over 90% of the global GDP, we're still no less disentangled from trying to quantifying the real demand impact. Nevertheless, estimates are getting worse by the week. As such sell first figure out the math later seems to be the order of things as os oil getting sold indiscriminately with demand projections falling an estimated 26 million barrels this week

Spill in the broader Macro outlook and indeed the markets are mired in the most considerable mismatch between supply and demand in modern history/

A Rush Of Stimulus Is Giving Markets Breathing Room, But For How Long?

Related Articles

Keith Schneider
Sitting On The Dock Of The Bay By Keith Schneider - Oct 17, 2021

I am sure by now you and your family are feeling the effects of rising inflation.  It has manifested itself in just about every aspect of American life…rising food costs, building...

A Rush Of Stimulus Is Giving Markets Breathing Room, But For How Long?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email