GOLD: Gold’s Fortunes Whipsaw on Trump’s Comments.
Jan-23 22:47
- Gold prices love an interest rate cut and whilst gold started to stumble, driving prices lower, comments from Trump on tariffs and the need for lower interest rates saw bullion rebound to finish in line with where it started the day.
- For much of the week gold prices appeared supported by their safe-haven status but the week’s rally showed signs of softening before Trump addressed Davos in comments that drove volatility.
- Trump had already levelled comments at Mexico, Canada, China and the EU warning them during the week of the potential for tariffs.
- Opening the day at US$2,754.87 gold traded down to an intra-day low of $2,735.97 recovering to a high of $2,758.93 before closing where it started the day at $2,754.87.
- In further signs of Central Banks being active in gold markets, Turkey’s central bank gold reserves rose US$491m to US$66.5bn as of January 17.
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LOOK AHEAD: Thursday Data Calendar: Weekly Claims, Tsy Bills & 7Y Note Sale
Dec-24 18:38
- US Data/Speaker Calendar (prior, estimate)
- Dec-26 0830 Initial Jobless Claims (220k, 223k)
- Dec-26 0830 Continuing Claims (1.874M, 1.881M)
- Dec-26 1130 US Tsy $75B 4W, $70B 8W bill auctions
- Dec-26 1300 US Tsy $44B 7Y Note auction & $64B 17W bills
STIR: FED Reverse Repo Operation
Dec-24 18:24
RRP usage climbs to $180.989B this afternoon from $116.004B yesterday. Compares to $98.356B last Friday - the lowest level since mid-April 2021. The number of counterparties climbs to 52 from 47 prior.
US TSYS: Late Session Rebound, Post-Auction Short Sets Unwound
Dec-24 18:19
- Treasury futures look to finish Tuesday's shortened Christmas-eve session near session highs, TYH5 +2.5 at 107-17 vs. 108-19 high, after trading much of the session weaker. The 10Y contract had breached a couple levels of technical support on it's way down to 108-09.5 low, 10Y yield climbing to 4.8160% high last seen in late May.
- Rates recovered soon after the $70B 5Y note auction (91282CMD0) stopped 0.2bp through (second consecutive stop since June): drawing 4.478% high yield vs. 4.480% WI; 2.40x bid-to-cover vs. 2.43x for the prior auction.
- The bounce helped projected rate cuts into early 2025 look steady to slightly higher vs. this morning (*) as follows: Jan'25 steady at -2.1bp, Mar'25 at -12.6bp (-11.7bp), May'25 -17.2bp (-16.7bp), Jun'25 -24.6bp (-23.1bp).
- No substantive reaction to regional Fed data:
- -6.0 reading for December's Philadelphia Fed's Nonmanufacturing current regional activity index (-2.4 expected) represented a steady outturn from -5.9 prior, and suggested a regional services sector that remained "weak", per the report.
- Richmond Fed's regional manufacturing survey index came in in at -10 as expected in December, the best reading since June (-14 prior). The shipments and employment subindices were flat, but new orders saw a solid improvement to -11 from -19 prior.
- Markets closed for Christmas holiday Wednesday, Globex pre-open Wednesday evening at 1700ET/re-open at 1800ET. Full sessions Thursday & Friday.
