BoE holds, markets rally

Central banks are no longer rushing to cut interest rates.

The Bank of England left interest rates unchanged on Thursday. Reuters reports:

The Bank of England left interest rates at a record low of 0.5 percent on Thursday and said it would take two more months to complete its 75 billion pound quantitative easing programme to fight recession.

Earlier on Thursday, South Korea's central bank had also left its key interest rate unchanged at two percent.

An improving economic picture would probably help put a floor on central bank rates, and Thursday's US data did provide a sense of that. From Bloomberg:

The U.S. trade deficit tumbled in February to the lowest level in nine years as collapsing demand from consumers and companies reverberated around the globe.

The gap narrowed to $26 billion, less than anticipated, from a revised $36.2 billion in January, the Commerce Department said...

Imports fell 5.1 percent to $152.7 billion, the lowest since September 2004...

U.S. exports climbed 1.6 percent to $126.8 billion as sales of pharmaceutical supplies, autos and telecommunications equipment improved...

And initial claims for unemployment insurance fell by 20,000 to 654,000 last week.

Of course, the trends in the economic indicators remain mixed on the whole and any brightening in the outlook must be considered tentative. But that's still an improvement over the gloom earlier in the year, and that's enough for global markets to rally, as Bloomberg reports.

Global stocks rallied, led by a record gain in U.S. bank shares, as better-than-estimated earnings at Wells Fargo & Co. and speculation American lenders will pass government stress tests boosted confidence in the financial system...

The S&P 500 added 3.8 percent to a two-month high of 856.56 and capped a fifth straight weekly gain, the longest stretch since the bear market started in October 2007. The Dow Jones Industrial Average rose 246.27, or 3.1 percent, to 8,083.38. Eleven stocks gained for each that fell on the New York Stock Exchange...

Benchmark stock gauges in Germany and Hong Kong added 3 percent as the MSCI World Index of 23 developed nations increased 3.1 percent, the most in a week...

The S&P 500 has rallied 27 percent since reaching the lowest level in a dozen years on March 9...

Treasury 10-year notes fell for the first time in three days as the economy showed signs of stabilizing, diminishing the safety appeal of government debt. The yield on the 10-year note rose seven basis points, or 0.07 percentage point, to 2.93 percent...

Crude rallied 5.8 percent to $52.24 a barrel as copper and aluminum also gained. Gold fell in New York, capping a third straight weekly loss, dropping 0.3 percent to $883.30 an ounce.