VIX

The relentless risk levitation continued overnight, as global shares extended their stretch of consecutive record highs on Thursday for a 10th day after a cautious BOJ lifted Asian stocks to a decade high with a dovish announcement that offered no surprises, while pushing back Kuroda's 2% inflation target to 2020, the 6th consecutive delay. With all eyes on the ECB in just over an hour, US equity futures are in the green, following solid gains around the globe. European stocks extended their biggest gain in a week while Asian equities maintained their rally.

Via Global Macro Monitor,

Since the Fed began raising interest rates in December 2015,  financial market liquidity conditions have loosened considerably.   Recall our post,  Orwellian Monetary Policy,  which we wrote in May.

“Tightening is Easing”

 

In a dramatic appeal for rationality at the Fed, Bank of America's global FX strategy team today released a note titled "take that punch bowl away", which laments that while central banks backtracked from their hawkish recent rhetoric this week, it warns that "they will be sorry if they allow bubbles" and predicts that vol will increase this fall adding that the bank remains "cautious and selective in EM FX, despite the Fed-triggered rally this week."

It was another painfully low-volume overnight session, which however did not prevent global stocks from hitting another record highs, capping their best week in over two months as the dollar stayed close to nine-month lows following Yellen's dovish retreat in which she noted caution on persistently low inflation (hence today's CPI print will be especially important) as odds of future rate hikes in 2017 and 2018 dropped.

America’s largest banks and their shareholders were quick to celebrate a recovery in trading revenues over the past year. But they may have spoken too soon.

Wall Street vets know they can’t fight the Fed – especially with the ostensibly “data-dependent” central bank committing to returning the Fed funds rate to 3% over the next two years.  But with the arrival of the summer doldrums ushering in low trading volumes across markets, traders are acknowledging that they can’t fight the seasons, either.