Markets clutching at straws

Commodity prices ended November little changed, thanks to the technical rebound in WTI and the recovery in risk assets generally late in the month. The markets have taken the view that the cut in the already-low interest rate on an existing and barely-used dollar swap facility between the world's major central banks, and a long-anticipated shift in monetary policy in China, will be enough to offset the deepening financial crisis and looming recession in Europe and the slowdown in the Chinese economy. That view seems too optimistic to us.