Calm Before the Storm: Key Dates to Prepare For

August has been a slow month across financial markets as many traders have been enjoying a break before autumn begins.  News flows are expected to increase dramatically in the coming weeks, and markets will be faced with many key decision points very shortly. Below are some key dates to watch for.


Friday, August 31: Fed Chairman Ben Bernanke delivers a key speech from a symposium in Jackson Hole, Wyoming.  Markets expect to gain clues on whether the Fed will initiate another Large Asset Purchases Program (LSAP) in the near term to stimulate the economy.  However, with the recent run of better-than-expected US data, Bernanke may not show his hand, and instead merely reiterate his current stance that the Fed remains ready to act should the economy materially worsen.


Thursday, September 6: The ECB interest rate policy announcement.  The market is widely expecting the ECB to elaborate on any planned asset purchases aimed at reducing the debt burden of periphery euro zone countries.  The main question is whether they will introduce unlimited asset purchases aimed at capping the yield on government bonds at sustainable levels.


Wednesday, September 12: German Constitutional Court ruling on the European Stability Mechanism (ESM).  The ruling with decide whether the proposed ESM structure (the euro zone’s longer term bailout fund) is in line with German sovereignty.  A ruling against the ESM’s establishment would certainly be a negative for the euro and bring into question the future path of the euro zone’s debt crisis, while a ruling in favour of its establishment would be in line with expectations.



Thursday, September  13: Fed policy decision and press conference.  The market's expectations of further easing will likely be informed by Bernanke’s speech from Jackson Hole and the jobs report released September 7th.  However, with the US presidential election coming in November, the possibility of a significant change in policy before then is reduced significantly and a new round of LSAP may be put off until early 2013.