GOLD: Gold Prices Up on Steady US Inflation.
Dec-12 00:06
- Gold’s good run continued overnight following the US inflation print firming up expectations for a rate cut.
- US consumer prices rose in line with expectations at +2.7% y/y, whilst moderately up from the prior month.
- Core CPI rose +0.3% MoM as expected.
- Markets reacted favourably to the data with the cut now almost 100% priced in versus only <90% as of start of the week.
- Starting the US trading day at US$2,694.25 gold rose steadily all day to close at $2,718.23.
- The supportive CPI is an additional positive factor for gold this week following news of China’s Central Bank – the PBOC – has resumed purchases of bullion.
- Gold was up +0.89% in price yesterday, marking the fourth consecutive day of positive returns and on track for a strong week.
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US TSYS: Tsys Futures Edge Lower Overnight, Cash Trading To Reopen
Nov-11 23:51
- Tsys futures edged lower throughout the US session overnight, however volumes were low with cash trading closed for veterans day. There was a late push higher overnight, although we closed roughly in the middle of the session ranges.
- TU has opened +01⅛ at 102-22⅝, TY is +04+ at 110-01+ with the long-end outperforming, USZ4 is now trading above Monday highs.
- The trend structure in Treasuries is unchanged and remains bearish. Last week’s move lower reinforces current conditions. Short-term gains are considered corrective. For the 10yr contract a resumption of the bear leg would open 109-05 next, the 76.4% retracement of the Apr - Sep bull cycle (cont). The 109-00 handle remains exposed too. Initial firm resistance - pierced on Monday - is seen at 111-01, the 20-day EMA.
- The market is no longer pricing in a full rate cut in December, projected rate cuts into early 2025 compared to early Monday levels (*): Dec'24 cumulative -16.3bp (-17.1bp), Jan'25 -24.3bp (-25.7bp), Mar'25 -37.6bp (-38.9bp), May'25 -45.0bp (-46.9bp).
- Cash trading will resume shortly, with the 10yr expected to open at about 3.33%.
- It is another slow session for US data, Fed speakers will be the focus with Waller, Barkin, Kashkari and Harker all speaking, while attention will turn to CPI on Wednesda
JGB TECHS: (Z4) Bounce Reverses
Nov-11 23:45
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 146.53 - High Aug 6
- PRICE: 143.62 @ 15:57 GMT Nov 11
- SUP 1: 143.39 - Low Nov 07
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
Prices fell further last week, extending the recent pullback. The return lower at the start of this week has culminated in a break of 143.57, marking both the Jul 17 high on the continuation contract as well as the Oct 22 low. For now, the 50-dma tops out at 144.32, and marks first resistance. A continuation higher would open 146.53, the Aug 6 high (cont) and a bull trigger.
JGBS: Futures Slightly Weaker Overnight
Nov-11 23:44
In post-Tokyo trade, JGB futures are slightly weaker, -2 compared to settlement levels.
- The cash US tsy market was closed on Monday but futures (TYZ4) were weaker.
- The S&P 500 reset its record high (6017.31), though it failed to hold its early advance. Tesla was ~9% higher. The Russell 2000 Index was up ~1.5%, reaching its highest level since 2021.
- Prime Minister Shigeru Ishiba secured re-election as Japan's prime minister in a special session of the National Diet (the two chambers of Japan's parliament) on Monday. Ishiba's LDP coalition is in a weakened position and we govern via minority. This will mean that they will rely on the support of minor parties to pass legislation, with the DPP likely to play a key role. (See link)
- Support for low-income households is expected to be part of the government's near-term economic stimulus measures per NHK (See link).
- Today, the local calendar will see M2 & M3 Money Stock and Machine Tool Orders data alongside BOJ Rinban operations covering 1-25-year OTR JGBs.
