Oil prices recovered after the retreat yesterday as the market paid attention to Tropical Storm Isaac which caused disruption of oil production facilities. Yet, prices remained capped the worries over global economic slowdown as Japan revised lower its GDP growth forecast. This week's focus is mainly on the Jackson Hope Symposium. In 2010, the Fed announced QE2 after Fed Chairman Ben Bernanke indicated further quantitative easing in his speech at the same event. The market thus hoped to get some hints from the upcoming forum about whether there will be QE3 and the timing of implementation. However, we do not expect much surprise as most information has been disclosed in the August FOMC minutes.

Tropical Storm Isaac continues approaching the Gulf of Mexico, resulting in 78% closure of oil production in the area. The National Hurricane Center forecast that Isaac will become hurricane and is on a track to reach the Louisiana coast today or early tomorrow. While the White House has made no announcement yet, there has been increasing expectations that oil from Strategic Petroleum Reserve will be released to meet demand.

The most important event this week would be the Jackson Hope Symposium held on August 31. However, we do not think much insight would be given from Fed's speech. This is because, unlike the event held 2 years ago, the August FOMC minutes were released before the symposium and little new could be delivered this time. We expect Chairman Bernanke would evaluate the pros and cons of various easing tools discussed by the Fed although many of them have been mentioned in the August FOMC minutes. In addition to asset purchases (QE3), options that policymakers considered include flexible asset purchases, cutting interest on reserve, forward guidance extension and the BOE-type funding for lending.

On the dataflow, the Japanese government lowered its economic assessment for the first time in 10 months. At the monthly released earlier today, the Cabinet office said that "the Japanese economy is on the way to recovery at a moderate pace, partly due to reconstruction demand, while some weak movements are seen recently". However, downside risks remained with a "further slowing down of overseas economies and sharp fluctuations in the financial and capital markets". Moreover, Finance Minister Jun Azumi worried that government funds may "dry up" up if a financing bill fails to pass in the upper house of parliament. In the US, the consumer confidence probably edged higher to 66 in August from 65.9 a month ago. The S&P/Case-Shiller Index probably slipped -0.2% in June after dropping -0.7% in the prior month.