Gold set for best week in four on Fed pause bets

Nov 17 – Gold prices held steady on Friday but headed for their biggest weekly gain in four as the dollar and Treasury yields weakened amid growing expectations that the US Federal Reserve is done with its monetary policy tightening.

Spot gold was steady at USD 1,980.20 per ounce by 2:45 p.m. ET (1945 GMT) after rising to a two-week high earlier in the session. Prices were up about 2.2% so far this week.

US gold futures settled down 0.1% at USD 1,984.70.

“There is a strong potential for gold to continue to rally a bit more but prices have to move a bit lower, before the next leg-up in the rally and perhaps test the USD 2,000 level at the same time,” said Everett Millman, chief market analyst at Gainesville Coins.

“Data that came out this week cemented the fact that the Fed is likely done with rate hikes, helping gold. Gold’s move will depend on incoming data and market response to the data.”

This week’s data revealed the US consumer price index was unchanged in October and another set of data highlighted that the number of Americans filing new claims for unemployment benefits increased more than expected last week.

The market is now pricing in interest rate cuts as early as May next year after data pointed to slowing inflation.

Lower interest rates exert downward pressure on the dollar and bond yields, enhancing the appeal of non-yielding bullion.

The dollar was on track for a steep weekly drop, while the 10-year Treasury yield also fell.

On the physical front, Indian buyers brushed off record-high local prices this week making gold purchases during the Diwali festival week in the country.

Spot silver fell 0.1% to USD 23.72 per ounce, while platinum rose 0.4% to USD 895.95. Both were up 6.7% so far this week.

Palladium gained 1.4% to USD 1,052.56 per ounce and headed for its best week in over a year.

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; Editing by Jane Merriman and Shounak Dasgupta)

Global equity funds see surge in inflows on Fed pause hopes

Nov 17 – Global equity funds saw significant inflows in the week ending Nov. 15, buoyed by investor hopes that cooler-than-expected US inflation would prompt the Federal Reserve to pause interest rate hikes.

The MSCI World Equity Index hit a two-month peak of 686.32 this week, propelled by US data on Tuesday indicating that consumer prices in October remained steady, defying expectations of a 0.1% increase. The core Consumer Price Index (CPI), rising only 0.2%, also fell short of the anticipated 0.3% hike.

Investors pumped in a net USD 11.48 billion into global equity funds during the week, marking the biggest weekly net purchase since June 14, LSEG data showed.

US equity funds alone attracted USD 9.33 billion, a significant rise from the USD 1.84 billion in net purchases a week earlier. European and Asian equity funds also saw inflows, attracting USD 1.24 billion and USD 431 million, respectively.

The technology sector, in particular, witnessed a notable surge in interest, with a net USD 2.15 billion poured into the sector — the highest since Dec. 15, 2021.

Gold, precious metals, and communication services sectors attracted USD 534 million and USD 237 million, respectively.

Global bond funds continued to attract capital, with approximately USD 3.5 billion channeled into them, marking the second consecutive week of net buying. High-yield bond funds recorded net purchases of around USD 5.01 billion, building on the previous week’s USD 6.43 billion inflow.

However, government bond funds saw a drastic reduction in inflows, receiving only USD 140 million, a 95% decrease from the USD 2.77 billion net buying in the week prior.

In the commodities market, energy funds remained popular for the fourth week in a row, securing about USD 77 million in inflows. Precious metal funds experienced modest inflows of USD 53 million, the smallest in three weeks.

Emerging market (EM) data, encompassing 29,658 funds, highlighted a net sell-off of USD 1.3 billion in EM bond funds during the week, a stark contrast to the USD 745 million net purchases seen a week earlier. EM equity funds continued to face headwinds, with a net USD 554 million exiting in a 14th consecutive week of outflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)

Foreigners sell Asian bonds for third month on US yield rise, Middle East tensions

Nov 17 – Foreign investors continued to retreat from Asian bonds for the third consecutive month in October, driven by a rise in US Treasury yields and heightened geopolitical tensions in the Middle East.

According to data from regional regulatory authorities and bond market associations, foreigners offloaded a net total of USD 761 million in bonds from Malaysia, Indonesia, South Korea, India, and Thailand. This outflow follows approximately USD 3.58 billion in net sales the previous month.

Indonesian bonds bore the brunt, with foreign net selling reaching USD 800 million, albeit a 47% decrease from the USD 1.5 billion in disposals seen a month earlier.

Malaysian and South Korean bonds also faced selloffs, with investors pulling out USD 538 million and USD 515 million, respectively.

Conversely, Indian bonds bucked the trend, attracting about USD 767 million from overseas investors, the seventh consecutive month of net inflows. Thai bonds also experienced a resurgence, receiving net cross-border inflows of USD 325 million after two months of consecutive outflows.

“The main driver was higher US bond yields which threatened to break above 5%, with a brief period of geopolitical risk aversion due to the Israel-Hamas war,” said Khoon Goh, head of Asia Research at ANZ.

US Treasury yields have, however, retreated this month, and hovered near two-month lows on Thursday after weekly jobless claims rose more than expected, helping cement expectations the Federal Reserve will not feel pressure to raise interest rates again to slow inflation.

“If US Treasury yields are capped, with US 10y appearing to face difficulty in sustaining a move above 5%, it would provide much-needed relief for EM Asia assets,” said Mitul Kotecha, an EM strategist at Barclays in a note.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)

Oil jumps 4% after week-long selloff, but falls for a fourth week

NEW YORK, Nov 17 – Oil prices jumped more than 4% on Friday, rebounding from a four-month low hit in the previous session, as investors who had taken short positions took profits and while US sanctions on some Russian oil shippers lent support.

Brent crude futures settled up USD 3.19, or about 4.1%, at USD 80.61 a barrel, while West Texas Intermediate crude (WTI) rose USD 2.99, or 4.1%, at USD 75.89.

“You’re getting a natural profit-taking rebound and short covering, to a degree,” said John Kilduff, partner at Again Capital LLC in New York.

Some of the losses were offset after the US imposed sanctions this week on maritime companies and vessels for shipping Russian oil sold above the Group of Seven’s price cap.

Still, both benchmarks ended the week more than 1% lower, their fourth straight weekly decline, mostly weighed down by a rise in US crude inventories and sustained record-high production.

China’s deepening property crisis and slowing industrial growth also weighed.

“Demand growth from China has been falling short of expectations,” said Andrew Lipow, president of Lipow Oil Associates.

US oil producers have been cutting the number of active drilling rigs for nearly a year due to weaker prices. The oil rig count, however, this week rose by six, the most since February, energy services firm Baker Hughes said.

“When you have a sharp drop in price, the producers think twice about moving ahead with capital spending and projects,” said Phil Flynn, an analyst at Price Futures Group.

Some analysts said Thursday’s sharp selloff may have been overdone, particularly in light of escalating tensions in the Middle East that could disrupt oil supplies and the US vowing to enforce sanctions against Hamas-backer Iran.

With Brent below USD 80, many analysts expect OPEC+, principally Saudi Arabia and Russia, to extend output cuts into 2024.

The OPEC+ group, comprising of the Organization of the Petroleum Exporting Countries and its allies, is set to consider whether to make additional oil supply cuts when the group meets later this month, three sources told Reuters.

“Oil prices are down slightly this year despite demand exceeding our optimistic expectations,” Goldman Sachs analysts said in a note.

“Non-core OPEC supply has been much stronger than expected, partly offset by OPEC cuts.”

For 2023, the US, which makes up two-thirds of non-OPEC+ growth, is forecast to deliver annual gains of 1.4 million barrels per day (bpd), according to the International Energy Agency (IEA).

Meanwhile, inflation in the eurozone appears to be thawing. On Friday, the EU’s statistics office confirmed annual inflation slowed sharply.

(Reporting by Nicole Jao, Natalie Grover, Florence Tan, and Sudarshan Varadhan; Editing by Marguerita Choy and David Gregorio)

Yen eyes best week in four months, dollar heads for weekly decline

SINGAPORE, Nov 17 – The yen was on track for its best week against the dollar in four months on Friday on the prospect of a narrowing US-Japan rate differential, with bets that the Federal Reserve is done raising rates leaving the greenback headed for a weekly loss.

A slew of weaker-than-expected US economic data released this week, led by a slowdown in inflation, has reinforced market expectations that the Fed has reached the end of its aggressive monetary tightening cycle, with focus now on when the first rate cuts could begin.

Market pricing shows just a 0.3% chance of another rate hike in December, as compared to a roughly 15% chance a week ago, with a 35% chance that the US central bank could begin easing monetary conditions as early as next March, according to the CME FedWatch tool.

That’s led to a decline in US Treasury yields alongside a fall in the dollar, which was on track to lose nearly 0.6% on the yen for the week, its worst weekly performance since July.

Against the greenback, the euro and sterling were likewise eyeing a weekly jump of more than 1.5% each, while the dollar index =USD was on track to lose 1.3%.

The euro steadied at USD 1.0851, while sterling last bought USD 1.2412.

“The market reaction to the (US) CPI was very substantial given that the inflation miss was only quite small, and that’s a bad sign for the dollar going forward,” said Sean Callow, a senior currency strategist at Westpac.

“It might set up a narrative whereby the markets start talking about the FOMC statement in December as not only being rates on hold but… that they might go to a more neutral stance.”

Separate data released this week showed US retail sales fell for the first time in seven months in October, while signs of a cooling US labour market continue to build as the number of Americans filing new claims for unemployment benefits increased to a three-month high last week.

The Japanese yen last stood at 150.72 per dollar, remaining on the weaker side of the 150 threshold and not far from Monday’s one-year low of 151.92 per dollar.

Despite a possible peak in US rates and even as insiders believe the Bank of Japan (BOJ) is priming markets for an end to negative interest rates, the wide gap between Japan’s ultra-low rates and those in the United States continues to keep the yen under pressure.

“I think (the BOJ) is still going to err on the cautious side. It’s our house view that they don’t touch policy settings for many, many months, so deep into next year,” said Callow.

“If that’s the case, then yes, the US dollar will probably have less yield appeal, but we don’t think it’s enough to really turn the tide — the gap is just still so wide.”

Elsewhere, the Australian and New Zealand dollars were likewise eyeing weekly gains of 1.7% and 1.3%, respectively, helped by the slide in the greenback.

The Aussie was last 0.08% lower at USD 0.6466, having showed little reaction to upbeat Australian jobs data released in the previous session.

The kiwi fell 0.14% to USD 0.5963.

(Reporting by Rae Wee. Editing by Sam Holmes)

US, Japan and S. Korea leaders to have trilateral meeting at APEC

SEOUL, Nov 17 – South Korean President Yoon Suk Yeol will meet with U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida on Thursday in San Francisco, according to Yoon’s office.

The trilateral meeting comes on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, three months after the three leaders met at Camp David in August.

Yoon and Kishida promised to push for deeper cooperation in a meeting earlier on the same day, Yoon’s office said on Friday.

“This year, bilateral cooperation is deepening with the reactivation of exchanges at each level, including at the summit level, and the restoration of consultation bodies between our governments,” Yoon was quoted as saying in a media pool report.

Kishida said he hopes to push forward with cooperation in politics, security guarantees, the economy and culture.

The two also discussed North Korea’s continued nuclear and missile tests and committed to working together with the United States on responding to the North, Japan’s foreign ministry said in a statement.

The pair met on Thursday, a day before they were due to attend a roundtable on technological cooperation at Stanford University.

They are expected to announce a joint supply network for carbon-neutral fuels such as hydrogen and ammonia, the Nikkei business daily has reported.

Yoon has made it a priority to mend ties with Japan since taking office in May 2022, and to restore trilateral security cooperation with the United States as North Korea ramps up its weapons programmes and openly threatens the South.

The moves have not always been popular at home, where many South Koreans believe Japan has not done enough to atone for its 1910-1945 occupation of the Korean peninsula.

Yoon and Kishida held a summit with U.S. President Joe Biden in August, pledging to deepen military and economic cooperation and restore an alliance aimed at countering North Korea’s threats and China’s growing influence.

(Reporting by Josh Smith in Seoul; Editing by Sam Holmes and Christopher Cushing)

Gold set for first weekly gain in three on Fed pause bets

Nov 17 – Gold prices rose slightly on Friday, on track for their first weekly gain in three, as investors grew confident that the U.S. Federal Reserve is done raising interest rates, sending the dollar and Treasury yields lower.

Fundamentals

* Spot gold was up 0.2% at USD 1,984.26 per ounce, as of 0059 GMT, after hitting its highest since Nov. 6 in the last session. US gold futures were steady at USD 1,987.

* Bullion is up 2.5% so far this week.

* The dollar was on track for a weekly drop, making gold less expensive for buyers holding other currencies, while yields on 10-year Treasury notes hovered near two-month lows.

* The number of Americans filing new claims for unemployment benefits increased more than expected last week, which could help the Fed’s fight against inflation.

* On Tuesday, data showed US headline consumer prices were flat in October, against expectations for a 0.1% rise. Core CPI, at 0.2%, came in below a forecast of 0.3%.

* The slowing jobs market and weaker-than-expected consumer inflation data prompted market participants to revise their forecasts for future Fed action.

* Traders now widely expect the Fed to leave rates unchanged at its Dec. 12-13 policy meeting, according to the CME FedWatch tool.

* Lower interest rates decrease the opportunity cost of holding gold.

* Spot silver rose 0.6% to USD 23.83 per ounce, while platinum was flat at USD 892.58. Palladium eased 0.2% to USD 1,035.77 per ounce.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)

Consolidation, at a dovish inflection point

Nov 16 – A bout of consolidation across Asian markets on Thursday is likely after the previous day’s stellar gains, as investors adjust to what appears to be a decisive moment in the global interest rate and inflation cycle.

There is a growing consensus forming that major central banks’ interest rate-raising cycle is over, a conviction strengthened by a series of inflation reports and other indicators from major economies.

Figures on Wednesday showed that US producer prices fell at their fastest pace since April 2020, and UK consumer inflation undershot all forecasts. Oil prices fell again on Wednesday, and are now down more than 10% year-on-year.

Investors are increasingly pricing in more rate cuts next year, bond yields and the dollar are coming under downward pressure, and stocks and risk assets are buoyant. All in, financial conditions in most countries are loosening.

Some of that reversed on Wednesday – Treasury yields and the dollar rebounded a bit from the previous day’s slump – which may keep a lid on Asian markets on Thursday, even though Wall Street held onto its gains and closed higher.

Investors could be forgiven for taking a breather on Thursday after such as huge rally on Wednesday that saw the MSCI Asia ex-Japan, MSCI Emerging Market index, and Japan’s Nikkei 225 all post their biggest gains in a year, of 2.5% or more.

But they also have other major economic and corporate news to digest, which will inject an extra dose of caution into the trading session.

The economic calendar sees the release of Japanese trade data, machinery orders, and the closely watched ‘tertiary activity index’, as well as Australian unemployment and Chinese house prices.

Japan’s GDP figures on Wednesday were much weaker than expected, leading economists at Barclays and elsewhere to cut their 2023 and 2024 growth forecasts.

But financial conditions in Japan are the loosest since 1990, according to Goldman Sachs, which is partly why the Bank of Japan has stepped up its hawkish rhetoric and may end its negative interest rate policy early next year.

Laying that ground at a time when the economy is shrinking, however, is not ideal.

China’s house price data will be closely watched for signs that the property sector is beginning to stabilize. There are signs of stabilization elsewhere in Chinese markets – the yuan is its strongest in three months against the dollar, and foreigners are increasing their holdings of China’s onshore yuan bonds.

On the policy front, the Philippine central bank is expected to keep its key interest rate unchanged at 6.50% on Thursday, although there’s an outside chance it might hike to 6.75%.

On the corporate front, China’s Alibaba and Lenovo released their latest earnings reports.

Here are key developments that could provide more direction to markets on Thursday:

– Japan trade (October)

– China house prices (October)

– Philippines interest rate decision

(By Jamie McGeever)

Treasury yields rebound from 2 month lows on mixed economic data

NEW YORK, Nov 15 – US Treasury yields rebounded from two-month lows on Wednesday despite signs of slowing inflation after a revision of retail sales data showed strong gains in September.

Overall, retail sales dipped 0.1% last month, slightly less than the 0.3% economists polled by Reuters expected, according to the Commerce Department. Data for September was revised higher to show sales increasing 0.9% instead of the previously reported 0.7% rise.

At the same time, the headline reading of the Producer Price Index was down 0.5% month on month, well below the estimate of a 0.1% rise, following Tuesday’s reading of lower consumer prices. Producer prices rose 0.5% in September.

“It’s this Jekyll and Hyde bond market right now where one moment you’re applauding good inflation data and the next you’re worried about strong economic data,” said Lawrence Gillum, chief fixed income strategist at LPL Financial. “As long as the Fed has the potential to either raise rates again or prolong interest rate cuts you will see these sporadic movements in the bond market.”

The yield on 10-year Treasury notes was up 9 basis points to 4.531%. The yield on the 30-year Treasury bond was up 6 basis points to 4.681%.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up 10.3 basis points at 4.920%.

Treasury yields, which move in the opposite direction of prices, plummeted on Tuesday following softer than expected consumer inflation data, pushing the 10-year Treasury yield down by its largest daily amount since March.

The mixed economic data Wednesday will likely stall any further large moves in yields, said Ian Lyngen, head of US rates strategy at BMO Capital Markets Fixed Income Strategy Team.

“We expect the market will drift sideways from here and a downward bias in yields will emerge as the weekend approaches,” he said.

November 15 Wednesday 3:35PM New York / 2035 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	5.26	5.4197	0.003
Six-month bills	5.21	5.4401	0.005
Two-year note	100-37/256	4.9203	0.103
Three-year note	99-214/256	4.6843	0.113
Five-year note	101-138/256	4.5244	0.103
Seven-year note	101-218/256	4.561	0.103
10-year note	99-192/256	4.5314	0.090
20-year bond	93-152/256	4.8837	0.070
30-year bond	101-24/256	4.6818	0.061

DOLLAR SWAP SPREADS
	Last (bps)	Net Change (bps)
US 2-year dollar swap spread	0.00	0.00
US 3-year dollar swap spread	0.00	0.00
US 5-year dollar swap spread	0.00	0.00
US 10-year dollar swap spread	0.00	0.00
US 30-year dollar swap spread	0.00	0.00

(Reporting by David Randall; Editing by Nick Zieminski and Jonathan Oatis)

Gold steadies as firm dollar counters bets on peak US rates

Nov 15 – Gold steadied below one-week highs on Wednesday, weighed by a stronger dollar, but expectations that the US Federal Reserve is done with hiking interest rates put a floor under prices.

Spot gold fell 0.1% to USD 1,960.49 per ounce by 2:20 p.m. ET (1920 GMT), after touching a one-week peak earlier. US gold futures settled 0.1% lower at USD 1,964.30.

Denting bullion’s appeal, the dollar index was up 0.4%, while benchmark 10-year US Treasury yields rebounded after a revision of retail sales data showed strong gains in September.

Bullion gained nearly 1% in the previous session after data showed that US consumer prices were unchanged in October. US producer prices fell by the most in three-and-a-half years in October, the latest indication of inflation pressures easing.

“The results from CPI and PPI are positive and it continues to support gold prices with the expectation that inflation will continue to pull back adding to the expectations that the Fed is done raising interest rates,” said David Meger, director of metals trading at High Ridge Futures.

The market was certain the US central bank will leave rates unchanged in December, with most traders eyeing rate cuts from May 2024, according to the CME FedWatch tool.

While gold is considered an inflation hedge, rising interest rates dull non-yielding bullion’s appeal.

“With yields back up, gold is lower after the initial spike up. I think the outlook will remain positive for (gold) assets but the moves will be more measured,” said Tai Wong, a New York-based independent metals trader.

Investors also looked at data that showed US retail sales fell in October, though by less than expected, after months of strong gains, pointing to slowing demand that could further strengthen expectations of a rate-hike pause.

Spot silver rose 1.6% to USD 23.45 per ounce, after touching its highest since Oct. 20 earlier.

Platinum was up 1.1% at USD 895.13 and palladium gained 1.5% to USD 1,032.45. Both metals were eyeing their third straight session of gains.

(Reporting by Anushree Mhukerjee and Ashitha Shivaprasad in Bengaluru; Editing by Emelia Sithole-Matarise and Tasim Zahid)

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