Via Damien Boey at Credit Suisse:
Central bankers seem quite averse to cycles and volatility. By corollary, they seem extremely keen to bail out passive investors. But why?
Overnight, the Fed cut rates by 50bps, and investors responded unkindly. Equities sold off aggressively, and volatility (VIX) rose to 36.8% from 33.4%. The 10-year bond yield fell to a new historical low of just under 1%. The real yield curve steepened a little, but remained quite inverted, suggesting that investors see more cuts to come.
