Draghi pledge to "do what it takes" (again) propels markets to new highs.
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Asian markets were relatively quiet. The Shanghai Composite rose 1.83% as the PBOC added money to the banking system. An announcement that the PBOC cut interest rates was made after the close. The 1-year deposit rate fell to 2.75% from 3.00% and the 1-year lending rate fell to 5.6% from 6.0%
The move helped get European markets off to a solid start, but things really took off when ECB President Mario Draghi stated (again) that “ we will do what we must to raise inflation expectations as fast as possible.” By the close, markets there had booked sizeable gains.
Momentum built into the US open when the highs for the day were made. The rest of the day saw markets steadily erode those gains. 10-Year Note yields were flat, but the US$ stormed higher as the Euro fell. Crude oil began the day with a sharp move higher, but seesawed throughout the day. With OPEC meeting next Thursday and a potential production cut on the table, it finished modestly higher. Gold also jumped, briefly reaching resistance at the 50-day moving average before finishing just below $1200.
After giving back most of the morning’s gains, equities steadied. By the close, markets were modestly higher.