Market indexes have traded quietly so far this week as they track roughly sideways as volume settles down. Under the surface, leading stocks continue to make headway, adding to the positive undertones to the market over the past seven trading days. The market's quiet but positive tone is likely indicative of investors awaiting signs of impending quantitative easing from Fed Chief Ben Bernanke's speech at the upcoming Jackson Hole, Wyoming summit this Friday. While ECB head Mario Draghi is backing out from taking part in this week's Fed summit due to alleged schedule commitment, he and other European offiicials have turned up the rhetoric a notch. Draghi penned an editorial in the German newspaper "Die Ziet" wherein he calls for the use of "exceptional measures" and hints at going "beyond standard monetary policy tools" to help calm financial markets that are "fragmented or influenced by irrational fears," according to one source. As well, EC President Van Rompuy on Tuesday warned against "persistent financial market defiance."
All of this would appear to be leading to a major announcement on September 6, and despite the rhetoric, markets could continue to trade sideways in anticipation of something more concrete from the ECB. Meanwhile, with respect to the Fed, a recent Reuters poll of 61 economists assigned a 45% probability that the Fed will launch a third round of quantitative easing after the next meeting.
In other economic news, a key home price index rose more than expected in June, but a gauge of consumer confidence dropped in August and missed forecasts, adding to the mixed economic picture.