Rattled by May's market madness, global policy-makers have finally started to show that they get the message, although their words will need to be followed by strong action before too long. Although the ECB was not decisive enough for our liking given the gravity of the situation in Europe (see below), at least Mario Draghi promised to act if the growth outlook worsened. Fed Vice-Chairman Janet Yellen conceded last night that the American economy was 'vulnerable to setbacks' and might require additional stimulus: Fed Chairman Bernanke will likely reinforce this point when he testifies to the Joint Economic Committee later today (see below). China in particular has implemented significant extra stimulus over recent weeks in response to their worsening growth performance; India has vowed to raise infrastructure spending to boost their ailing economy; and the RBA has lowered rates by 75bp over the past six weeks. Also, the BOE could decide to expand their asset purchases program when they meet this morning (see below). In response, the major American and European bourses were up more than 2% yesterday, Brent is back above USD 100 a barrel, and both the yen and the dollar have given back some of their recent gains. The euro suddenly looks a little perkier, notwithstanding ongoing concerns over both Greece and Spain.
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