The week ahead promises to be volatile, at least for the Straits Times Index, partly because of the slew of US economic data that is due to be released. But the main factor is Wednesday's testimony by US Federal Reserve chairman Ben Bernanke before the House Financial Services Committee in Washington and his Thursday testimony to the Senate.

As most investors know, Mr Bernanke's utterances have been the primary drivers of equity markets for the past seven weeks or so, stretching back to May 22 when much to the dismay of the bulls, he first spoke of "tapering" the Fed's QE3 stimulus programme. Those statements jolted equity markets and since then, every
Bernanke speech has been a major market‐moving event, each spawning incessant debate over the meanings of particular words and phrases that were used.

According to the minutes of the June Federal Open Market Committee (FOMC) meeting, about half of the committee think that tapering should start late this year, and one suspects that even Mr Bernanke himself has no fixed date in mind.

Certainly, given that the indications are that he will step down as Fed chairman when his term ends next January, it is very likely that he would want his legacy to be not just an avoidance of another Great Depression but also a healing US economy that is not mired in recession and joblessness.

Today there are the latest retail sales figures, while tomorrow brings forth the housing market index, industrial production numbers and the latest consumer price index.

Incidentally, it's probably also worth bearing in mind that today sees the release of China's second‐  quarter GDP figures. Although no major surprises are expected, traders should stay on their toes ‐ just in case.

Source: AmFraser