Today is a holiday-shortened session but that doesn’t mean that the markets will be on vacation.
The day’s big event is Federal Reserve Chairman Ben Bernanke’s speech at the Fed’s annual symposium in Jackson Hole, WY.
Investors will dissect every phrase looking for clues about the economy and housing.
More importantly, markets want some advance notice about whether the Fed will lower the Fed Funds Rate at its next meeting September 18.
It won’t get any.
Just before his address was scheduled to begin, the Fed’s favorite predictor of inflation — the Personal Consumption and Expenditures report — was released and showed that growth is within a tolerable range.
It’s more likely that Bernanke will spend time talking about data that is known (i.e. the PCE report and other measurable statistics) versus data that is unknown (i.e. how the credit markets will impact the U.S. economy in the future).
With fewer traders participating today, expect more volatile action than usual as the three-day Labor Day Weekend begins.