Another Round of easing

September, historically a weak month for stocks, has seen the S & P index fall 13 percent since April. This, coupled with bad news, comes from the property sector which has stoked fears of a double dip recession. However Federal Reserve Chairman Ben Bernanke boosted stocks by signalling the Fed is ready to act if the economy worsens. If those disappoint, the S & P 500 could breach technical support levels, pushing stocks yet lower. Orders for factory goods dropped in July signalling the manufacturing sector may also be stalling.

Economic numbers recently released signals the fact that US recovery had slowed down. This, despite massive quantitative easing. The Fed chief is prepared to make decisions on interest rates, is prepared to inject money into the economy through unconventional measures. Or they might include relaunching large scale purchase of Treasury bonds and mortgage-backed securities. Despite concerns, most analysts felt that the most likely prospect was for continued soft expansion rather than a double dip downturn. And hence another round of easing looks probable. While this may not be immediately useful to US own economy, this has led to the outflow of US dollars to other economies on the other side of the globe..particularly Asian economies and causing inflation. Commodities looked set for a further rise in prices.