Metals and energy rallied on Bernanke’s announcement that though no action will be taken now, the Fed will be ready to act should economic conditions worsen. His comments are reminiscent of remarks he made in 2010 from Jackson Hole where he strongly hinted at the possibility of QE2. Crude moved up $1.73 closing at $96.35. Natural gas rallied nearly 2% closing at $2.801. Gold surged higher closing up $36.60 closing at 1691.40. Silver moved up 4.18% closing at 31.72.
Volatility was down today with the VIX falling a little over two percent closing at 17.47.
The story of the day was the Bernanke speech. Although he made no explicit statement about what action they would take if the economy deteriorates, the consensus is that it will almost certainly be another round of asset purchasing. Markets rallied after the implementation of the first two rounds of easing but markets are concerned over the effectiveness of further easing. Analysts expect that there the likelihood of easing is now very high and that we won’t hear another announcement of significance until around the election.
James Ramelli University of Illinois graduate in finance Email: james@keeneonthemarket.com, Follow @Jim_KOTM