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Policy vs the cycle: the latest round

Drivers of big volatility in both directions in markets at present are the conflicting forces of the cycle and government/central bank interventions.

SHAKY: The only thing between stability and a new euro area debt crisis is confidence. The peripheral European economies are as fiscally and economically fragile as they were 3-4 years ago. But the costs of their borrowings have declined beyond fundamental economic reason.

THE big three central banks - the European Central Bank (ECB), Bank of Japan (BOJ) and the US Federal Reserve - have spoken in what has been a busy two weeks for policy. What they have said, what they have done, and what they have promised, will support the risk asset market rally a bit longer...

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