High price reached $1679.70
The price of spot gold has surged over $30 or 1.83%. The price high just reached $1679.70. That’s the highest level since February 6, 2013.
Gold is spiking higher and up over $30 on the day or 1.83%
Archives of “Economy” tag
rss30 year yield falls to a new all time low
The headline of the day is that the 30 year yield traded to a new all time low of 1.8843%. That took out the August 2019 low yield of 1.9039% and although the yield is closing above that old low, the closing level will be the lowest on record.
Helping the yields move lower is the:
- Expectation of a cut in US rates by July and potential for another cut later in the year
- Flight to safety flows
- Lower global growth from the coronavirus
- Dollar buying as the US remains a safe haven
- The Markit Service and Composite PMI data was below the 50.0 level while the manufacturing index was lower than expectations as well.
The 10 year yield also moved lower and approached the swing low from 2019 at 1.4272%. The low yield today reached 1.4359% before rebounding into the close to 1.4700%. The all time low yield was in 2016 at 1.3180% (see chart below).
Below is a table of the current, high and low yields for the US debt along the yield curve. The 2-10 year spread also flattened to 12.14 basis points from 12.60 basis points yesterday.
US stocks today fell with the Nasdaq leading the way down. For the day, the Nasdaq fell -1.79% after being down as much as 2.14% at the low. The S&P index closed down a more modest -1.05% after falling as much as -1.33%. For the week, the major indices fell with the Dow down -1.46%, the S&P down -1.07% and the Nasdaq index down -1.39%.Gold was another big mover today and this week. The price of gold is trading up $24.00 or 1.48% at $1643.43. The high for the day reached $1649.26. That was the highest level since February 2013. For the week, the price of gold settled last Friday at $1584. The current price at $1643.43 is a $59.43 gain for the week or 3.75% gain. Big breakout move for gold this week.
The fall in stocks, rise in gold, fall in yields led to a fall in the USD today. The USD was the weakest of the major currencies today. The strongest currency was the GBP (but it came off the highs in the NY session). The dollar fell by 0.61% vs the GBP. It also fell versus the EUR by -.59% vs the EUR and -0.58% vs the CHF.
Major indices close lower. Indices also lower for the week
All-time highs were made but Thursday and Friday selling take the gains away
The major stock indices are ending the day lower with the NASDAQ falling by -1.79%. In a week where the NASDAQ and S&P index made new all-time highs, selling on Thursday and Friday have taken those gains away. The major indices are ending the week lower.
The final numbers are showing:
- Dow industrial average -227.30 points or -0.78% at 28992.68
- S&P index -35.55 points or -1.05% at 3337.68
- NASDAQ index -174.38 points or -1.79% at 9576.59.
For the week, the Dow industrial average was the weakest followed closely by the NASDAQ index:
- Dow industrial average, -1.46%
- S&P index, -1.07%
- Nasdaq index -1.39%
Dollar poised to benefit as China economic growth takes virus hit – Citi
The firm says that the dollar is well placed to benefit from the situation compared to other G-10 currencies in the market
Citi’s currency strategist, Adam Pickett, says that “consensus expectations have not yet fully adjusted to the reality of weaker Chinese growth that will result from efforts to contain COVID-19”.
Adding that the market is underpricing the possibility of China’s economy being dealt a blow and overvaluing the prospects of recent stimulus measures. As such, Pickett argues that the dollar stands to benefit and outperform in this scenario.
Noting that the greenback should outperform against open manufacturing economies such as the NOK, NZD and EUR. Although safe havens may perform better, the US economy and key trading partners are “likely to be insulated”, he argues.
Additionally, he points out that market hopes for meaningful Chinese stimulus to ensure a V-shaped recovery are overblown – saying that the current Chinese administration “still prefers slower, sustainable growth than previous cycles”.
This adds to the NAB dollar call earlier in the day here but again, I would say it is conditional upon which currencies you’re looking at and on what scenario.
A highly risk-off landscape would still favour the yen more so than the greenback but against the likes of the kiwi and euro, the dollar definitely will shine if the situation plays out as what is described by Pickett above.
Japan core machinery orders for December -12.5% m/m (expected -8.9%)
A capex indicator for Japan in the months ahead, 6 to 9 months out.
-12.5% m/m
- expected -8.9%, prior 18.0% m/m
-3.5% y/y
- expected -0.7%, prior 5.3% y/y
The m/m is very volatile, the y/y is a little smoother. Both are misses though.
As part of the process the Cabinet Office survey manufacturers:
- the firms expect core orders will fall 5.2% in Q1 of this year (from -2.1% in Q4 2019)
China Securities Journal reports PBOC may conduct an MLF this week at a lower rate
MLF is medium term lending facility, 6 to 12 month loans to banks
Lowering the rate would be another effort at stimulus from the People’s Bank of China in the wake of the coronavirus outbreak. There is MLF maturing this week.
European shares close mostly lower but off lows for the day
German DAX, -0.16%, France’s CAC, -0.36%
The major European indices are now close for the day and indices are closing lower but well off the lows for the day. The provisional closes are showing:
- German DAX, -0.16%. It was as low as -1.26%
- France’s CAC, -0.36%. It was as low as -1.25%
- UKs FTSE 100, -1.25%. It was as low as -1.69%
- Spain’s Ibex, -0.16%. It was as low as -1.47%
- Italy’s FTSE MIB bucked the trend and rose by 0.19% That is up from a low of -1.10%.
In debt market, the benchmark 10 year yields are mostly lower with the exception of the UK. The ranges and changes are currently showing:
In other markets:- Spot gold is trading up $10.07 or 0.64% $1576.09
- WTI crude oil is up $0.27 or 0.53% of $51.45
in the US equity market, the earlier declines in stocks have been mostly raised in the broad indices at least. The Dow is still negative:
- S&P index is down -1.5 points or -0.5% at 3378. The hi reached 3380.36
- NASDAQ index is unchanged at 9725.40. The high reached 9732.87.
- Dow is down 78 points or -0.27% at 29471.4.
In the US debt market, yields are off lows but still remain modestly lower on the day.
The ranking of the major currencies shows the GBP is the strongest and the NZD is the weakest.
How many different ways can you say “Record close for US indices”?
Major US indices close at records and near highs for the day
How many different ways can you say “Record close for the US indices?” It is like a broken record.
The final numbers are showing:
- S&P index +21.64 points or 0.64% at 3379.40
- NASDAQ index +87.01 points was +0.90% at 9725.96
- Dow +275.08 points or 0.94% at 29551.42
Some of the oversize winners today include:
- First solar, +4.86%
- United health, +4.36%
- Micron, +3.55%
- AliBaba, +3.33%
- Daimler, +3.19%
- Twitter, +3.18%
- Walgreen boots, +2.83%
- Caterpillar, +2.55%
- Apple, +2.3%
- United Airlines, +2.10%
- Qualcomm, +1.93%
Some of the losers today include:
- Lyft, -10.24%
- Beyond Meats, -1.99%
- Phillip Morris, -1.75%
- Gilead, -1.2%
- Stryker, -0.93%
- Pfizer, -0.92%
- Amgen, -0.83%
- Tesla, -0.82%
- Lockheed Martin, -0.78%
- Procter & Gamble, -0.60%
- J&J, -0.57%
The NASDAQ and S&P close at record levels
Give up most of gains. Dow ends unchanged
The NASDAQ and S&P index are closing at record levels. That is the good news. The bad news is the major indices are closing well off the highs for the day.
The final numbers are showing:
- The S&P index is closing up 5.68 points or 0.17% at 3357.77. The high reached 3375.63. The low extended to 3352.72
- The the NASDAQ index is closing up 10.552 points or 0.11% at 9638.94. The high reached 9714.738. The low extended to 9617.211
- The Dow fell -0.48 points to 29276.34. The high reached 29415.39. The low extended to 29210.47.
At the highs, the S&P index was up 0.70%, the NASDAQ index was up 0.90% and the Dow industrial average was up 0.47%.
Coronavirus FX implications: The good, the static, & the bad
What to watch for in the outbreak
3 scenarios for Coronavirus and its FX implications.
“Coronavirus was unknown to asset markets two months ago, may disappear as a factor within a few months, but may also evolve into a major global supply shock if it spreads and intensifies. We lay out the alternative scenarios on how the disease could evolve and what the short-medium term FX responses might be. Our subjective assessment is that current asset market pricing probably lies somewhat closer to the static than good scenarios,” SC notes.
“FX winners (W) and losers (L) under our good scenario where the disease abates:
• W: CAD, CNY, MXN, KRW, IDR, RUB
• L: USD, CHF, JPY
FX winners (W) and losers (L) under our static scenario of neither major intensification nor elimination:
• W: USD, JPY, CHF, MXN
• L: KRW, TWD, THB, SGD, MYR, AUD, NZD, EUR, CNY, CAD
FX winners (W) and losers (L) under our bad scenario where the disease intensifies and spreads:
• W: JPY, USD
• L: KRW, TWD, THB, SGD, MYR, IDR, INR, AUD, NZD, EUR, CNY, CAD,”