Where do we go from here?
E-minis are erasing losses of over 4% from the end of Asia Pacific trading to sit in positive territory at the moment. The rise in European equities is also helping the mood, as the market is giving a tentative vote of confidence to the ECB. But what happens now?
The dollar is still bid in trading so far and that indicates that there are still funding pressures that need to be addressed. In that lieu, liquidity and funding worries could still spill over to credit worries if the issue is a persistent one.
But at the same time, the financial dislocation yesterday is somewhat being addressed by central banks and as evident with the bond market today, the situation is calmer.
However, the key question remains, is all this enough? And how long can the calm last? That is going to be something for the market to figure out over the next few sessions.
