One of the most important events takes place at the end of next week at the Jackson Hole Economic Symposium when both the US Federal Reserve chairman Ben Bernanke and European Central Bank president Mario Draghi make keynote addresses. Remember, it was at Jackson Hole two years ago that Mr Bernanke signalled that the US central bank intended to embark on a second round of quantitative easing (QE), news of which sent a rocket under both equity and commodity prices, and precious metals, in particular. The US central bank had been expected to announce another round of QE at its meeting on Wednesday 12 September, although expectations have been dampened in recent weeks due to better than expected US economic data. So any hints by Mr Bernanke ahead of that key Fed meeting would be very significant indeed.
Investors will also be paying as much attention to Mr Draghi who has already stated that the ECB “will do whatever it takes” to protect the euro. The implication being that the central bank is working on a plan to step in and buy the sovereign debt of Italy and Spain on a massive scale to reduce market yields and bring their borrowing costs back to economic levels. We will not have long to wait for a political reaction to Mr Draghi’s speech as a meeting of EU Finance Ministers takes place on Monday 3 September – scheduled for when US equity markets are closed for Labor Day - and comes only three days before the Governing Council of the ECB meets on Thursday 6 September. Some market watchers expect an ECB bond buying programme could even be announced at that September meeting. One thing is for sure: Mr Draghi will be intensely questioned over what has, or hasn’t been agreed by the central bank’s Governing Council, regards any eurozone bond-buying blitz.