Markets Consolidate Ahead of Big Data Week
Global financial markets were relatively subdued yesterday ahead of a big week of data and central bank updates, although Gold had another standout day to power north to new 3-month highs. The major US indices took a bit of a breather from recent gains, the Dow losing 0.25%, the S&P off 0.12% and the Nasdaq dropping a more substantial 0.41% on the day. US treasury yields pushed back a bit higher, the 2-year gaining 7 basis points to move up to 4.604% and the benchmark 10-year rising 4 basis points back to 4.217%. Oil prices dipped as hopes for a ceasefire in Gaza increased, WTI dipping 1.5% to trade back to $78.74 per barrel and Brent dropping back to $82.80 per barrel. Both Gold and Bitcoin were the standout trades on the day with Gold hitting that new 3-month high near $2,120 and Bitcoin rising to within touching distance of its all-time high at $69,000.
Gold Shines Again – Up Another 1.5%
On a day in financial markets that was distinctly lacking in major movers, Gold shone brightly to take the spotlight. Having already made a big move north on Friday in what was again another quiet day for other products, Gold again took off in trading on Monday to reach new highs, notching up a near 5% gain in just the last 3 days of trading. These moves have left some old campaigners scratching their heads as there has been little else moving, and the old ‘haven buying’ line lacks any real metal (excuse the pun!) when risk trades are sitting near all-time highs. Some commentators are talking about the dollar side of the trade, but in the FX world the greenback has been stuck in the doldrums and yesterday we saw US treasury yields push higher. So, what is behind the moves, large portfolio diversification, huge stop loss runs in quiet markets, or the conspiracy theorists’ favourite, some large preemptive positioning for something more sinister? The picture will become clearer over the next few days as data and central bankers hit the market, but for now the next target is the all-time high at $2,135.40 per ounce which is in touching distance given recent moves.
The Weeks Event Calendar Kicks Off in Earnest Today
It is set to be a lively start to the trading day in Asia as the event calendar kicks into action for the week. Japanese markets have already been in focus with the latest Tokyo Core CPI numbers released early in the session, coming in dead on expectation with a 2.5% increase for the year-on year number. These numbers however are likely to be superseded for Yen traders by the Bank of Japan Governor Kazuo Ueda when he speaks later in the day. Investor focus will then switch to Chinese markets as the National People’s Congress kicks off in Beijing and we have the latest Caixin Services PMI data out. There is very little in terms of tier 1 data due out in Europe but the New York session see’s the first of many US data releases of the week in the form of the ISM Services PMI numbers and we are set to hear from the FOMC’s Michael Barr later in the day.
