During a speech in New York, Federal Reserve Chairman Ben Bernanke sounded quite bearish, saying that expansion in the US will fall short of potential as recovery "will not happen right away" while the credit markets "will take some time to unfreeze." The comments have confirmed fears amongst investors that the US government's intervention efforts on Monday will not serve as an instant solution for the issues plaguing the markets, and that the US economy is bound to face recession. In fact, Mr. Bernanke said that export sales will probably decline given the truly global nature of the economic slowdown, which may be particularly negative for US GDP figures going forward since robust exports were the primary reason why Q2 GDP was so strong. The Japanese yen has gained in the minutes following Mr. Bernanke's comments as the markets remain risk averse, as evidence by sharp declines in equities (the DJIA and S&P 500 are both down over 4%) and solid demand for safe-havens like gold and the US dollar.
Source: Bloomberg