|Day's Range||1.9820 - 2.0140|
|52 Week Range||1.9750 - 3.2480|
Gold soared to an almost six-year high on Tuesday on escalating U.S.-Iran tensions, while equity markets slid on disappointing economic data and uncertainty on whether the Federal Reserve will cut interest rates in July as has been expected. Fed Chairman Jerome Powell said in a speech the U.S. central bank is insulated from short-term political pressures as policymakers wrestle with whether to cut rates amid slowing growth as President Donald Trump has demanded. Equity markets have rallied this month in anticipation that Fed policymakers would cut rates, but Powell's remarks cast doubt on those expectations when he referred to the Fed's independence.
Gold is trading higher for the fifth day amid a weak dollar and a possible rate cut by the fed in its FOMC meeting this July.
Market jitters ease in the early part of the day. There’s been no chatter to get the markets going, but it’s early and things could escalate rapidly…
I place the odds of a meeting between Trump and Xi taking place at 50/50, and if it does take place, it’s another 50/50 that they’ll reach any substantive agreement. Look for stocks to give back some of last week’s gains if the meeting is cancelled and to rally if they agree to renewed trade talks.
Gold traders are going to continue to take their cues from the direction of Treasury yields and the U.S. Dollar. The best chance for another spike to the upside will be on Tuesday when Federal Reserve Chairman Jerome Powell speaks.
Although central bank policymakers decided to leave rates unchanged in June, investors became convinced it was poised to cut rates in July and September when the Federal Open Market Committee changed the language in previous monetary policy statements.
June 20: The Conference Board’s U.S. leading economic indicator (LEI) index was reported unchanged on a month-over-month basis in May (the median forecast was 0.1%) following 0.1% in April, 0.2% in March, 0.2% in February, no change in January, 0.2% in December, 0.1% in November, and a negative 0.1% in October. The following commentary from the Conference Board was included in the press release, and it is consistent with our own near-term view. “The U.S. LEI was unchanged in May, following three consecutive increases.
The Federal Reserve and other central banks are signaling more interest rates and quantitative easing to come. Founding father Alexander Hamilton wouldn’t be amused, Jim Grant writes.
The benchmark S&P 500 index hit a record high on Thursday as an almost giddy euphoria over the prospects of a U.S. interest rate cut fuelled the appetite for equities, but there are plenty of pitfalls that could throw the stock market off course. "This is probably one of the riskiest points you're ever going to see in the stock market," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. The S&P 500 on Thursday finished at a record closing high and the 10-year Treasury yield dipped below 2% for the first time in more than 2-1/2 years a day after the Federal Reserve signalled the potential for a rate cut as soon as its next meeting in July as it said it was ready to battle risks to the economy, including the U.S.-China trade war.
World stock markets jumped on Thursday, with the U.S. benchmark S&P 500 hitting a record high, while the 10-year U.S. Treasury yield fell below 2% as investors digested a signal from the Federal Reserve of potential U.S. interest rate cuts as soon as its next meeting. The dollar weakened after the Fed, the U.S. central bank, on Wednesday indicated a marked shift in sentiment even as it left its benchmark rate unchanged for now. “I do think that today’s move is due to yesterday’s Fed move," said James Ragan, director of wealth management research at D.A. Davidson.
(Bloomberg) -- The Federal Reserve’s ready-to-act tone Wednesday is prompting strategists to fret about just how far U.S. yields, which are already near historic lows, could sink.Take Bank of America Corp.’s Bruno Braizinha, for example. His baseline forecast is still mild: 2.05% for 10-year Treasuries in the first quarter of next year, close to the current level of 2%. But he’s entertaining the possibility that the rate could get close to zero by the end of next year.“Bond yields reflect the fragility of economies,” Braizinha, Bank of America’s director of U.S. rates strategy, said in an interview. Treasuries could rally more because they “will be one of the few developed-world safe havens that retains some value for investors in either our base-case or hypothetical scenario.”He’s not alone in pondering the possibility things get fraught. Jon Hill at BMO Capital Markets says 10-year notes could “easily” go below 1% in the next 12 to 18 months if the Fed is viewed as taking drastic easing action, while 10- and 30-year rates in Japan and Germany could also move lower.A day after Fed Chairman Jerome Powell seemed to confirm some strategists’ view that the first rate cut may be 50 basis points, investors continued to pile into bonds, sending the 10-year yield below 2% for the first time since November 2016. The U.S. central bank would join a large chunk of the developed world that’s been adding stimulus, including the European Central Bank and Bank of Japan. Bank of America expects 14 central banks to lower rates this year, including more than one move by those in the U.S, China, Brazil and Russia.“If we’re in a world where the Fed is seen as returning to the zero lower bound, and then starting another QE program, that could easily be enough to push 10-year yields below 1%,” Hill said in an interview. “Although not our base case, it is possible that scenario could play out in the next 12 to 18 months.”BMO’s baseline forecast calls for the 10-year Treasury to stay below 2% until inflation accelerates, assuming the Fed starts to cut rates. It sees 1.93% as the lower bound of the yield’s current trend. But if the market starts to price in the prospect of even more rate cuts from the Fed, there would be little to keep the yield from falling through 1.50% once it breaks below 1.65%, according to BMO.A shift to an easing cycle by the Fed, along with the ECB and BOJ, would put downward pressure on 10-year and 30-year Treasuries, bunds and JGB yields, Hill said. The yield on 10-year German government debt has largely stayed below zero since March, while Japan’s is at minus 0.17%, approaching its July 2016 all-time low of minus 0.3%.Before Thursday, the closely followed 10-year Treasury yield -- which acts as a benchmark for auto loans, credit cards, home mortgages and student debt and also serves as a barometer of investor confidence -- had stayed above 2% since November 2016, when Donald Trump won the U.S. presidential election, leading to a selloff in Treasuries and the biggest rise in the yield in more than half a century.The yield reached a record closing low of 1.3579% on July 8, 2016. Investors flocked to safety on signs of global stagnation despite the U.S. economy’s strength, confident that the Fed would continue to be on hold with rates, while the ECB and BOJ were using negative rates.“The 1.35% to 1.50% range for 10-year Treasury yields is rather significant,” given the strong resistance there in 2012 and 2016, Braizinha said. It’s also worth paying attention to the yield difference between 2-year and 10-year Treasuries, which could either follow the pattern of past easing cycles by steepening toward 125 to 150 basis points or converge toward 25 to 50 basis points in a scenario in which the Fed cuts rates to zero, he said. It’s currently about 27 basis points.Barclays Chief U.S. Economist Michael Gapen sees the 10-year yield at 1.95% through year-end and says getting it below 1% might require a worse-than-average recession similar to the one seen in 2007-2009, “a lot of deflation,” or a Fed yield-curve target. Anne Walsh, chief investment officer of fixed income at Guggenheim Partners, says the yield may be destined for 1.5%, while TD Securities strategists such as Priya Misra say it may drop to 1.30% by the second quarter of 2020, which would be a record low.A number of strategists had already cut their 2019 forecasts in May, when Treasury yields slid to the lowest levels in more than a year. On Tuesday, the 10-year yield was pushed to the brink of breaching 2% after ECB President Mario Draghi said more stimulus would be needed in the euro region if the outlook doesn’t improve.“If yields continue to fall globally, that would be under a scenario in which growth is weak, and we would favor higher-quality fixed income and equity investments,” said Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, part of a division that oversees $1.8 trillion in assets.With a forecast of 2% to 2.5% for the 10-year yield through year-end, McMillion says “the market really is trying to balance demand for Treasuries with the potential for some good news on trade.”\--With assistance from Masaki Kondo and James Hirai.To contact the reporter on this story: Vivien Lou Chen in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Benjamin Purvis at email@example.com, Nick Baker, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
By Gertrude Chavez-Dreyfuss NEW YORK, June 20 (Reuters) - U.S. benchmark 10-year Treasury yields on Thursday dropped below 2% for the first time in more than 2-1/2 years, while other maturities fell to multi-year lows as well, a day after the Federal Reserve flagged interest rate cuts as early as next month. U.S. 30-year yields likewise plunged to their lowest since October 2016, while those on two-year notes slid to their weakest level since mid-November 2017. The Fed on Wednesday signaled interest rate cuts beginning as early as July, saying it is ready to battle growing global and domestic economic risks given rising trade tensions and weak inflation. "The statement indicated the Fed no longer insists on a pause or patience, providing an open ear to doves at upcoming meetings.
Total U.S. consumer debt hit $14 trillion in the first quarter of 2019, surpassing the roughly $13 trillion of leverage accumulated in credit cards, auto loans and mortgages and other debt back in 2008.
This is not a panic situation so the Fed’s decision will still be data dependent. If labor market, manufacturing and inflation data continue to come in weak, then they’ll cut in July. If it stays steady or improves, then they won’t. That’s the risk of being “all in” at current price levels.
The Fed didn’t surprise anyone with its decision to leave rates unchanged in June, traders had placed only a 20% probability on a rate cut, but the split vote tells investors that a cut is on the way, and its increasingly likely that will be in July, as the price action in the Treasury, gold and stock markets tells us.
Stocks edged up as investors reacted to the Federal Reserve’s latest monetary policy decision to keep benchmark interest rates unchanged.
U.S. stocks rose and Treasury yields declined as investors awaited Federal Reserve’s monetary policy decision and considered indications of further stimulus from other major global central banks.
There have been arguments that traders have now pre-positioned portfolios, and happy to drift into the menagerie of central bank speakers this week.
U.S. government debt yields continued to fall Thursday morning after President Donald Trump declined to set a deadline on levying tariffs on another $325 billion of Chinese goods.
U.S. government debt ticke higher Monday after President Donald Trump said U.S. tariffs on goods from Mexico would be suspended.
With lackluster May jobs report fueling the odds of an easier monetary policy by the Federal Reserve, one top economist is slamming the brakes on a rate cut. According to Neil Dutta, Head of Economics at Renaissance Macro, June/July timeframe still feels a little too soon for a rate cut.
The Dow Jones Industrial Average is rising after the market decided to that a weak payrolls report was good news as long as it meant that the Federal Reserve will cut interest rates. The Dow has gained 124.47 points, or 0.5%, to 25,845.13 Friday morning, while the S&P 500 has risen 0.5% to 2858.67 and the Nasdaq Composite has gained 0.6% to 7662.87. The unemployment rate held steady at 3.6%, in-line with estimates, while average hourly earnings grew by just 0.2% in May from April, short of expectations for 0.3%.
Treasury yields fell Friday after the U.S. government said the economy added far fewer jobs than expected during the month of May.