Prices vulnerable again to QE3 disappointment

Not for the first time, commodity prices have recently been propped up by hopes of additional monetary stimulus from the US central bank. This explains the initial market disappointment that Chairman Bernanke failed to signal the imminent launch of QE3 in his Congressional testimony today. More importantly, however, even if the Fed is eventually forced into further action, we suspect that any boost to commodity prices would be smaller and shorter-lived than in the past.