St. James's Place News
Federal Reserve keeps everyone guessing over QE3
In the absence of any decisive news or announcements last week, investors continued to mull over the economic and political sound bites, and markets meandered in much the same way as global policymakers appear to be doing.
On Friday it was the turn of Federal Reserve chairman Ben Bernanke, but his long-awaited speech at the yearly symposium of central bankers in Jackson Hole failed to provide the hoped-for specifics about whether and when the Fed would commit to further large-scale asset purchases, or 'QE3'.
More fence-sitting disappointed the stock-market bulls, with the result that equity markets across Europe and the US trimmed earlier gains to end the week in marginally negative territory as the S&P 500 Index finished down -0.47% and the FTSE 100 shifted -1.13%.
Also in this week's bulletin...
- Equity markets quickly turned their attention to this Thursday's policy meeting of the European Central Bank and hopes that its president, Mario Draghi, will unveil a bond-buying programme to ease pressure on Spanish and Italian sovereign yields.
- However, persuading Germany to agree to the ECB's open-ended commitment to buy bonds appears to be one of the major challenges for Draghi as reports emerged last week that the chief of the Bundesbank, Jens Weidmann, had threatened to resign in protest at the plans to prop up Spain and Italy.
- Research by HSBC reveals that stock market investors have had to get used to greater, potentially unsettling volatility in recent years as a new paper details that the FTSE 100 Index was five times more volatile over the last decade than in the 10 years before.
View this week's Market Bulletin (PDF), which contains thoughts and opinions of St. James’s Place and our range of investment managers on the key issues affecting investors.
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