Waiting for Bernanke: Analyst expectations

Ishaq Siddiqi, market strategist, ETX Capital:

Fed chairman Bernanke’s testimony to US Congress turning out to be the key-risk event over the next two session, prompting both the bulls and bears to avoid building too much risk exposure. Stocks on Wall Street fell on Tuesday and Asian markets were mixed in overnight trade giving European indices little fresh direction.

Bernanke’s speech will be released before his testimony begins and it’s likely the Fed chief will repeat his remarks last week that US monetary policy will remain highly accommodative for the foreseeable future and interest rates will remain at unprecedented low levels.

Kit Juckes, Societe Generale:

The press speculation suggests, that he will remain fairly dovish, trying to make a clear distinction between ‘tapering’ and tightening monetary policy. It isn’t clear to me at all why this should be a surprise to anyone by now, and I doubt there is much further to go on the downside for US yields – a massive collective yawn followed by a search for new information seems more likely – but it is possible that the calming tone will have more impact across other markets.

Mike van Dulken, head of research, Accendo Markets:

With sideways action since July 10, even after the Fed’s reiteration of easy monetary policy and tapering of QE3 only if data keep improving, and the new revelation that even if employment does improve QE3 could stay as is if inflation disappoints, the question now is whether Bernanke can add anything new this afternoon to give the rally a second wind. We’re not expecting any surprises in the testimony text (unlikely to stray far from last communication) – if there is any excitement, like last time it’ll be in the Q&A.

Will the Fed Chairman play his market cards right for the markets? I can hear Brucie shouting now: “Higher, or Lower?”