So the pound sterling is soaring as the euro strengthens, while dollar, yen weaken. Welcome to central bank currency manipulation.
The UK was downgraded yesterday to AA from AAA by S&P and Fitch, yet the pound is stronger and UK bond yields went lower. Go figure.
We must be in “Jabberwocky”, and I half expect to see Alice sometime soon saying, “Oh, nothing makes sense anymore.”
Call it a “snap back” or “deviation to the mean” but don’t call it market manipulation.
The question is who is driving this? Is it the central banks saying, “we are here to put a floor to the losses with our intervention” or better yet, the market saying we believe central banks will step in so the market rallies showing central banks that the can move and get the desired market results.
Was that a rabbit that I saw just run by saying. “I’m late, I’m late”?
“Coordinated intervention by central banks,” is the phrase the market wanted to hear, no matter who said it.
And when the bazooka comes out, you get a downgrade on sovereign debt and a lower yield. You get a stronger euro, as its second largest economy pulls out.
Welcome to Jabberwocky” but you don’t need a mirror to figure out what is coming next.