Daily Futures Commentary August 25, 2009

Tuesday, August 25, 2009

Today President Obama is expected to reappoint Fed Chairman Bernanke to another term. This news did not come as surprise to the markets especially after Bernanke’s upbeat speech late last week regarding the economic recovery in the U.S. Traders also figured that he would stay on board especially since there is still a long road to recovery before the Fed begins to raise interest rates. With so many Fed actions yet to be unwound before the U.S. fully recovers from the worst recession in decades, it didn’t make sense to hand the job over to anyone else.

Comments from a banking official in China shouldn’t be ignored by traders. Overnight a banking official said that governments and central banks have to be wary of excessive cash causing asset bubbles. This news comes as central banks have to decide whether to up the amount of financial stimulus available or remove some of the excess stimulus still in the system now that the global economy has started to recover. Look for pressure on China’s equity markets and lower demand for commodities if China decides to curb excessive liquidity. Weakness in its …
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