Well....whoever was at 1490 in the SPX must have gone out to lunch at an inopportune time yesterday, because the level finally broke and generated a pretty aggressive follow-through. The chart suddenly looks pretty ugly, and with little near-term prospect of monetary relief this market may decide to have a proper go at the downside. This may ultimately provide the opportunity to scoop up some handsome bargains, but the for the time being Macro Man is content to stand aside and let his hedges do their work.

Today sees news from three different central banks, all of whom find themselves in a different situation confronting different problems. How they choose to address these issues may ultimately tells us quite a bit about the resepctive institutions.

First off is the Bank of England, which announces its rate decision at noon local time today. While a few are looking for a 25 bp cut, recent hawkish comments from a number of MPC members make this a highly unlikely outcome, in Macro Man's view. A more pressing issue for the Bank is its stature, its reputation, and even its very independence from government meddling, which is being called into question for the first time since Gordon Brown freed the Bank in 1997.

Over the past week markets have subjected to the rather unedifying spectacle of a pissing match between Chancellor Alistair Darling and BOE Governor Mervyn King over who should carry the can for the Northern Rock debacle. The arguments, summarized in the graphic below, at least raise the possibility that the Bank delays any required monetary easing to avoid the impression of caving in or supporting the Government's wishes.

Forty-five minutes after the BOE, the European Central Bank will also announce its rate decision, followed by a press conference at 1.30 pm London time. It is the latter event which will be the primary object of focus, as the market scrutinizes M. Trichet's comments for signs that the tightening cycle is over and/or that the euro has become a source of concern.

It is incontrevertible that the euro has led to a tightening of monetary conditions; indeed, the EUR's real effective exchange rate, combined with real interest rates in the Eurozone, have generated the tightest monetary conditions in Europe since 1992.