Various measures, more or less sophisticated, of market expectations indicate that US key interest rates will remain at levels close to zero for even longer than expected, until at least mid-2015; and the odds of another round of QE (quantitative money expansion) have reached 99%. Markets responded positively again this morning to the prospects for monetary stimulus, as well as the major step forward in Europe's sovereign debt crisis. The unlimited purchase of securities on the secondary market, announced by Draghi albeit with various conditionalities, is an important weapon, and the paradox is that it is a weapon that may never be used: the simple announcement is enough to bring the spreads towards reasonable levels.
The MSCI Asia Pacific regional index is roughly unchanged, thus consolidating recent gains (China's stocks are higher, with the slowdown in industrial production bringing monetary stimulus closer). The euro, after the leap above 1,28 last week, remains just below that level, and raw materials, from copper to oil, also consolidate recent progress.
