To me, this all revolves around how much the prop desks are willing to stick their necks out to defend the market. We saw it this morning when the banks likely stepped in and bought ES futures (I'll try to post a time and sales chart here later Baires). The point is will they have the stomach to do this in the face of overwhelming bearishness? It's easy to do on light volume, but could end your career if you step in front of that freight train headed south. I'm sure the Fed is reminding them of the fact that it's the bank's turn to wash their back.

So what we have now is deflationary- hard to see how anyone can argue the current state. The big question is will the Fed continue buying treasuries, leaning on the prop desks, etc. to force an inflationary outcome? I think it's impossible to say at this point.