Oil rallied as high as $49.87 after the Fed opened up the monetary spigots like never before. Inflation phobes ran in to snap up commodities like they did last summer for fear that the Fed liquidity injections would set off a world-side inflation firestorm. Well how did that work out for ya?
I’m keying off this $50 level as a real barometer of risk sentiment going forward. If it is broken, reflation psychology will take hold. If not, it could be the canary in the coal mine warning us that risk aversion is till very much at hand.
