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The strong demand for the US 30-year bond auction, that followed two other strong 3 and 10 year auctions this week triggered no appetite across the US bonds space yesterday, most probably because the 30-year paper is a long maturity paper and is mostly purchased by insurance and pension funds. But the week has been successful for the US Treasury department which saw a solid demand for its debt this week, and that’s thanks to the expectation that the rates will fall – sometime this year – and that the Treasury will also slow down the pace of purchases moving forward. Appetite in risk assets remains robust. The S&P500 index shortly traded at the 5000 psychological mark before closing a few points below this level. The rally is not only fueled by rate cut expectations and AI speculation but is also backed – to some extent – by encouraging tech earnings from the stars of the league. Note that Apple, Microsoft, Alphabet, Amazon and Meta generated nearly $140bn cash from their operations last quarter. That was the highest on record. CPI revisions The Bureau of Statistics will release the CPI revisions today, which consists of the revised month-over-month CPI figures… Read More »Diving into the CPI numbers

Dovish BoJ weakens JPY, AUD slumps on China fears Summary Better-than-expected Initial US Unemployment Claims, easing to 218,000 from 227,000 previously lifted bond yields and the Dollar. A popular gauge of the Greenback’s value against a basket of 6 major currencies, the Dollar Index (DXY) pushed up to 104.15 (104.00). US treasury yields rallied with the 10-year finishing up 5 basis points to 4.17%. The two-year US treasury rate rose to 4.45% from 4.42%. In contrast, Japan’s 10-year yield fell to 0.69% (0.72%). The US Dollar soared 0.9% to 149.37 Yen from 147.97 previously. Bank of Japan Deputy Governor Uchida said that the central bank was unlikely to raise interest rates aggressively. Richmond Fed President Tom Barkin said that it’s a good idea that the US central bank take its time with interest rate cuts given all the uncertainty on where the US economy is headed. China’s Consumer Prices slumped 0.8% in January from a year ago, the largest drop since 2009. The USD/CNH gained to 7.2150 from 7.2050. Chinese authorities were expected to stabilize the currency and prop up the economy. The Australian Dollar (AUD/USD) often seen as the FX proxy for China, slumped 0.51% to 0.6485 (0.6527).  The… Read More »Dollar, yields push up – US initial jobless claims ease

The US blue chip index has not quite reached the 5,000 level at the time of writing, it is a mere 5 points away, but it seems inevitable that this key psychological level could be coming. The question now is what happens after this level is potentially breached? There is a bit of market nervousness around the 5,000 level and the index is fluctuating ahead of this level. The S&P 500 has rallied by more than 4.68% so far this year, easily outpacing European shares, and even performing better than the Nikkei on a  YTD basis, so some fatigue around this key level is to be expected. Earnings help to justify US stock market rally There has been good news regarding earnings. After a weak start to Q4 earnings season, largely because bank earnings disappointed, the outlook has brightened. There have been some notable outperformances from big oil, Disney, the tech giants and consumer discretionary like Uber, which has pushed Q4 earnings on aggregate for the S&P 500 into positive territory for last quarter. The earnings beat is widespread, which supports the rally in US stocks broadening beyond tech. However, while earnings reports are pulling their weight when it comes… Read More »US stocks eye 5,000 as earnings deliver, but CPI revisions could kill the party vibe

Gold price keeps its range play intact near $2,040, with US CPI revisions eyed. Cautious optimism and negative US Treasury bond yields cap the US Dollar rebound Gold price stays hopeful while th $2,035-$2,030 support holds. RSI defends the midline. Gold price is treading water while defending the $2,030 level in Friday’s Asian trading. Investors trade with cautious optimism ahead of the US Consumer Price Index (CPI) revisions, which could have a significant influence on the Federal Reserve’s (Fed) interest rates outlook, eventually impacting the US Dollar (USD) and the interest-rate-sensitive Gold price. Gold price remains at the mercy of US inflation data Ahead of next week’s January CPI inflation report from the United States, all eyes remain on Friday’s seasonally adjusted CPI revisions. The revisions are likely to emerge as the key event risks in Friday’s trading, as they will help markets reprice the Fed rate cut expectations. The data will be closely scrutinized by the Fed for affirming the disinflation trend. A large upward revision to US CPI data, a year ago, triggered a big US Dollar reaction. Therefore, Gold traders are preferring to stay on the sidelines, refraining from placing any fresh directional bets on the bright… Read More »Gold Price Forecast: XAU/USD traders appear non-committal ahead of US CPI revisions

Markets On Thursday, U.S. stock indexes remained subdued as markets paused at elevated levels, with the S&P 500 hovering just shy of the symbolic 5,000-point milestone. Investors were carefully assessing significant corporate earnings releases, secondary jobs data, and statements from policymakers regarding expectations for interest rate cuts. While it’s not uncommon for markets to pause and consolidate after reaching significant levels, there’s speculation that tomorrow’s CPI revisions might dampen recent optimism about inflation. This could shift investor sentiment, which has been relatively resilient to the recent subtle backup in U.S. yields over the past week, considering that correlations can fly as quickly as they stick.  Indeed, even Treasuries faced challenges in gaining traction despite a robust $25 billion sale of long-term bonds, which concluded a week of increased issuance sizes.  U.S. yields continued to climb despite the successful 30-year auction, which helped alleviate concerns about oversupply, clearly indicating some caution ahead of tomorrow’s CPI revisions. Yet stocks levitated near record height, driven once again by an increasingly narrower group of shares, which has analysts forever worried about concentration risk. The update of CPI seasonal adjustment factors last year was significant, revealing that inflation momentum was more substantial than previously believed… Read More »CPI revision concerns come to the fore

XAU/USD Current price: 2,0331.60 Government bond yields and Fed’s speakers lead the way. Robust United States employment figures further undermined rate cut odds. XAU/USD volatile price action ended without providing directional clues. Spot Gold hovers around $2,030 in the American session, posting modest intraday losses on Thursday. The US Dollar remained weak during Asian trading hours, picking up some steam ahead of Wall Street’s opening but holding within familiar levels. In the absence of relevant macroeconomic data, market players are taking clues from yields and central banks’ speakers. The yield on the 10-year US Treasury note surged intraday to 4.16% following United States (US) employment data. The country reported that weekly unemployment claims rose to 218K in the week finished February 2, beating the 220K expected. Robust data from the labor sector further undermined the rate-cut odds in the country. Meanwhile, remarks from Federal Reserve (Fed) officials align with Chair Jerome Powell’s comments following the central bank monetary policy meeting. American policymakers are confident inflation is in the right direction but maintain the cautious stance of waiting for more data to confirm it will keep trending lower. Overall, market participants are trying to digest the fact that rate cuts could… Read More »Gold Price Forecast: XAU/USD returns to its comfort zone around $2,030

EUR/USD edges higher toward 1.0800 after posting marginal gains on Wednesday. The near-term technical outlook points to a bullish tilt. A significant increase in US Initial Jobless Claims could hurt the USD. EUR/USD registered small gains on Wednesday and continued to push higher toward 1.0800 early Thursday. Although the pair’s near-term technical outlook highlights a bullish tilt, technical buyers could stay on the sidelines until 1.0800 is confirmed as support. Improving risk mood made it difficult for the US Dollar (USD) to find demand on Wednesday but a late recovery in US Treasury bond yields helped the currency limit its losses, capping EUR/USD’s upside. Meanwhile, European Central Bank (ECB) policymakers continue to push back against market expectations for an early policy pivot and support the Euro. ECB Executive Board member Isabel Schnabel said that they must remain patient and cautious on risks of inflation flaring up again. Similarly, Governing Council member Boris Vujcic argued that they shouldn’t rush to lower rates, citing resilience in services inflation and wages.

Hawkish comments from the Federal Reserve members continued to make the headlines in the US, yesterday, with Susan Collins, Thomas Barkin and a new Fed Governor Adriana Kugler, all saying the same exact thing: that there is no hurry for the US to cut the interest rates. But knowing that the Fed is done hiking its rates and the expectation that the next move from the Fed will be a rate cut is enough to keep the market in a sweet spot. The US had a record-breaking auction for its 10-year bonds yesterday, where it sold $42bn worth of notes at a lower than anticipated yield, the S&P500 renewed record and traded at a spitting distance from the 5000 psychological mark. Disney followed in the footsteps of its happy tech peers yesterday and rose almost 7% in the afterhours trading. Sentiment was less cheery in Germany after the commercial real estate stress jumped to Germany. Meanwhile in China, the CSI traded mixed after the announcement of deeper deflation in January. Alibaba missed the opportunity to break above its down-trending channel that has been building since last August as its shares dived 6% after its sales missed expectations in the latest… Read More »China’s deflating, US’s roaring [Video]

The Chinese economy is stabilising but the only fireworks will come from the new year celebrations which begin on 11 February as momentum remains weak . Mission accomplished on 2023 GDP as growth stabilises You could say it’s ‘mission accomplished’ as data over the past month confirms that the Chinese economy beat its 2023 GDP growth target and growth certainly stabilised. But as people celebrate the Chinese New Year, sentiment seems weak. Key activity data won’t be published this month, so expect a period of calm before the much anticipated annual parliamentary gathering, the Two Sessions, in early March. China’s GDP growth for the fourth quarter rose from 4.9% year-on-year to 5.2%, bringing 2023 full-year growth to 5.2% YoY, exceeding the 5% growth target set at last year’s Two Sessions. China 2023 GDP growth managed to beat the 5% target Monthly indicators show few signs of growth dynamism The property sector remains the largest drag on the economy. Real estate investment slumped to -9.6% YoY at the end of 2023, while the number of buildings sold also dropped 6.5%. Secondary market property prices fell 8.9% from the peak, while 39 of the National Bureau of Statistics’s 70-city sample saw a… Read More »China begins year of the Dragon with weak economic momentum

Gold price is stuck in a familiar range between $2,030 and $2,040 early Thursday. Risk-on rally in global stocks weighs on the US Dollar amid subdued US Treasury bond yields.   The path of least resistance for Gold price appears to the upside but $2,050 holds the key. Gold price is finding buyers early Thursday to take on the $2,040 barrier once again, having failed to resist above the same since last Friday. Gold price is capitalizing on the risk-on sentiment-driven US Dollar (USD) weakness while sluggish US Treasury bond yields also remain supportive. All eyes remain on mid-tier US jobs data and more Fedspeak The US Dollar is extending its downbeat momentum into Asian trading on Thursday, undermined by muted US Treasury bond yields and a risk rally seen on global markets. Asian stocks track the US equities higher, as the S&P 500 index closed at a record high, courtesy of strong earnings and increased expectations of a ‘soft-landing’ for the US economy. Markets also stay cheerful on expectations that more policy support measures from China could come through, as the country continues to battle deflation. China’s prices fell at the fastest pace in 15 years, reflected by the… Read More »Gold Price Forecast: XAU/USD needs acceptance above $2,050 to unleash the upside