Markets have been trading on every piece of news relating to QE and speculation on when the US FED will taper or stop the bond purchasing program. Bernanke further confused the market yesterday when he reiterated the Fed’s intent to keep the bonding purchasing program for the foreseeable future until there is significant improvement in the labor market. The Fed meeting minutes from the June FOMC meeting showed that many members want to see a reduction of QE before the end of this year if the US economy is able to sustain the recovery. A lot of traders were caught short in the commodities and Bernanke’s remarks sparked a short covering rally late yesterday afternoon and today. The higher than expected weekly initial jobless (360k vs. 344k last week) and continuing claims (2977k vs. 2953k last week) data further showed the stubbornly weak employment situation. Metals are trading and trying to hold some key levels: silver broke above $20 and is trying to hold that level, platinum is slightly above $1400 and holding, palladium traded above $725 but was not able to hold there, and gold failed to break above $1300. China slowdown/shift of their economic focus towards consumption, and potential banking issues there will continue to drag down the global economy and cast a doubt about the near term outlook. Unrest in the Middle East will keep oil prices high and hamper global recovery. We expect the debate about bond purchasing programs to rage on globally and throughout the summer. Thanks and have a wonderful day.
David M. Lee
Heraeus Metals New York LLC