Oil prices dive on big US crude stock build, record output

HOUSTON, Nov 15 – Oil prices tumbled more than 1.5% on Wednesday on a bigger-than-expected rise in US crude inventories and record production in the world’s biggest producer, along with mounting worries about demand in Asia.

Brent futures settled down USD 1.29, or 1.6%, at USD 81.18 a barrel. US West Texas Intermediate crude (WTI) fell USD 1.60, or 2%, at USD 76.66.

WTI’s front month contract was also lower than the second month, or in contango, for the first time since July. Prices for oil six months ahead also looked poised to rise above front month contract.

US crude stocks rose by 3.6 million barrels last week to 421.9 million barrels, according to the US Energy Information Administration (EIA), far exceeding analysts’ expectations in a Reuters poll for a 1.8 million-barrel rise.

The weekly government data, which was not published last week due to a systems upgrade, also showed US crude production was holding at a record 13.2 million barrels per day that it hit in October.

“US supply activity is a headwind for the market, and the US is a problem for OPEC+,” said John Kilduff, partner at Again Capital LLC in New York, adding he does not think Saudi Arabia can cut more output to boost prices.

Top oil exporters Saudi Arabia and Russia, part of OPEC+, the Organization of the Petroleum Exporting Countries and allies, said this month they would continue with their additional voluntary oil output cuts until year-end.

US gasoline stocks showed strong demand with a surprise draw of 1.5 million barrels last week. Diesel inventories fell more than expected at 1.4 million barrels.

The International Energy Agency on Tuesday joined OPEC in raising oil demand growth forecasts for this year, despite projections of slower economic growth in many major countries.

China’s oil refinery throughput eased in October from the previous month’s highs as industrial fuel demand weakened and refining margins narrowed. Still, its economic activity perked up in October as industrial output increased at a faster pace and retail sales growth beat expectations.

Japan’s economy contracted in July-September, snapping two straight quarters of expansion on soft consumption and exports.

US retail sales fell in October for the first time in seven months.

European Union diplomats said Russian oil tankers are not targeted in the European Commission’s proposal for tightening the implementation of a price cap on the country’s crude oil.

Earlier, the Financial Times reported that Denmark will be tasked with inspecting and potentially blocking Russian tankers sailing through its waters under new EU plans as a way of enforcing a USD 60 per barrel price cap on Moscow’s crude.

(Reporting by Arathy Somasekhar in Houston, Paul Carsten in London, and Sudarshan Varadhan and Laura Sanicola; Editing by Marguerita Choy and David Gregorio)

Wall Street rallies as data supports view Fed may be done hiking rates

NEW YORK, Nov 14 – The S&P 500 and Nasdaq posted their biggest daily percentage gains since April 27 on Tuesday as softer-than-expected inflation data supported the view that the Federal Reserve may be done raising interest rates.

The small-cap Russell 2000 index jumped 5.4%, outperforming the broader market, while the rate-sensitive S&P 500 real estate sector gained 5.3% and utilities rose 3.9%. All three registered their biggest daily percentage increases since Nov. 10, 2022.

Data showed US consumer prices were unchanged in October as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years. In the 12 months through October, the CPI climbed 3.2% – below economists’ estimates – after rising 3.7% in September.

“The clear catalyst was the softer-than-expected inflation report,” said Craig Fehr, head of investment strategy at Edward Jones.

“Getting some softer inflation readings provided markets some additional comfort that the Fed isn’t going to have to put in place a significant amount of additional restrictive policy to continue to bring consumer prices lower.”

Since March 2022, the Fed has hiked its policy rate by 525 basis points to combat high inflation.

The Dow Jones Industrial Average rose 489.83 points, or 1.43%, to 34,827.7; the S&P 500 gained 84.15 points, or 1.91%, at 4,495.7; and the Nasdaq Composite added 326.64 points, or 2.37%, at 14,094.38.

Also, the KBW regional banking index rose 7.5% in its biggest daily percentage rise since January 2021.

“It’s difficult with higher rates with the commercial real estate on their balance sheets,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

Expectations of the Fed cutting rates next year also shifted following the day’s data. US rate futures on Tuesday priced in a 65% chance of a rate cut in May, compared with 34% late on Monday, according to the CME’s FedWatch tool.

Investors also focused on negotiations by US lawmakers over a funding bill as they face an end-of-week deadline to fund the federal government.

Among individual stocks, Snap Inc. shares jumped 7.5% following news that Amazon.com will allow Snapchat users in the United States to buy some products listed on the ecommerce company directly from the social media app.

Home Depot gained 5.4% after the US home improvement chain beat quarterly profit estimates.

Volume on US exchanges was 12.62 billion shares, compared with the 11.09 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 9.80-to-1 ratio; on Nasdaq, a 3.59-to-1 ratio favored advancers.

The S&P 500 posted 45 new 52-week highs and no new lows; the Nasdaq Composite recorded 106 new highs and 139 new lows.

(Reporting by Caroline Valetkevitch; additional reporting by Sruthi Shankar and Amruta Khandekar in Bengaluru; additional reporting by Ankika Biswas; Editing by Shinjini Ganguli and Richard Chang)

To the moon, boosted by US soft landing hopes

Nov 15 – Asian markets open on Wednesday with stocks, risk assets, and investor sentiment around the world soaring after cooling US inflation data on Tuesday looked to close the door on more rate hikes and pave the way for the fabled economic ‘soft landing’.

Some of Tuesday’s US market moves were eye-popping – two- and five-year bond yields plunged more than 20 basis points; the Nasdaq rose more than 2%; the Russell 2000 index rose 5% for its best day in a year; the dollar fell 1.5% for its worst day in a year; and the Aussie and New Zealand dollars both leaped 2%.

This should be rocket fuel for Asia on Wednesday, although there is no shortage of event risk.

Top-tier data releases include third-quarter Japanese GDP and Chinese retail sales, industrial output, investment, and unemployment figures for October, while US and Chinese Presidents Joe Biden and Xi Jinping meet at the Asia Pacific Economic Cooperation forum in San Francisco.

Biden and Xi have only met once before, and this is Xi’s first visit to the US since 2017. Xi is hoping to persuade Biden to ease up on tariffs and export controls aimed at keeping the most advanced semiconductors from being sent to China.

In a separate dinner with business leaders, he will also be looking to boost flagging investment by US firms in China. Foreign investors have pulled huge sums out of China this year as the economy has faltered and tensions with the West have deepened.

Ahead of their talks, China’s yuan climbed to a three-month high of 7.25 per dollar on Tuesday, rising around 0.5% for its biggest one-day gain in two months.

The latest retail sales, industrial output, investment, and unemployment figures for October will give an insight into whether China’s economy is maintaining the surprisingly strong momentum it showed in the third quarter.

Citi’s China economic surprises index has been in positive territory for almost a month, suggesting activity is strengthening or analysts are lowering their expectations. Or a bit of both.

Japan’s economic surprises index, on the other hand, just slumped into negative territory and is the lowest since June. The first reading of third-quarter GDP on Wednesday could lift it again – the bar would appear low enough.

Economists reckon the economy contracted 0.1% from the April-June period and shrank 0.6% on an annualized basis. That would represent a significant slowdown from growth rates of 1.2% and 4.8%, respectively, in the previous quarter.

The corporate focus in Asia on Wednesday turns to the third quarter earnings reports from China’s JD.Com and Tencent Holdings. JD.Com is expected to report a 2.3% increase in revenue to CNY249.258 billion and CNY5.77 earnings per share.

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

– Japan GDP (Q3, preliminary)

– China retail sales, industrial output, investment, unemployment (October)

– Presidents Joe Biden and Xi Jinping meet

(By Jamie McGeever)

Dollar sinks after data shows US inflation cooling

NEW YORK, Nov 14 – The dollar fell more than 1% against major currencies on Tuesday after US consumer price data showed the pace of inflation moderating further in October, increasing the odds that the Federal Reserve is done hiking interest rates.

US consumer prices were unchanged last month amid lower gasoline prices, the Labor Department’s Bureau of Labor Statistics (BLS) said, following a 0.4% rise in September.

In the 12 months through October, the consumer price index (CPI) climbed 3.2% after rising 3.7% in September, BLS said.

The dollar immediately tumbled on the report’s release and Treasury yields plunged. The benchmark 10-year fell below 4.5%, removing a major support to the dollar’s strength this year.

“We think that the dollar will continue to weaken a bit throughout the end of the year, maybe even early into January,” said John Doyle, head of trading and dealing at Monex USA in Washington.

The dollar index, a measure of the US currency against six peers, slid 1.55% to 103.980, on track to its biggest single-day percentage decline since Nov. 11, 2022.

The US currency also was poised for its largest declines since November 2022 against the euro and British pound.

The dollar slipped 1.73% against the euro to USD 1.089, 1.82% against the British pound to USD 1.250 and 1.52% against the Swiss franc to 0.888.

The dollar also fell more than 1% versus the Norwegian krone and more than 2% against the Australian and New Zealand dollars.

The data was welcome news in the market, where many analysts have been predicting the Fed’s interest rate hiking has peaked.

“You can say goodbye to the rate-hiking era,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

But Doyle, among others, cautioned the end of rate hikes did not mean rate cuts would be coming as soon as markets were predicting due to a tight American labor market and resilient US economy that has kept consumers spending.

“I don’t think that they’re going to be itching to cut rates necessarily,” he said, referring to Fed policymakers. “The Fed’s going to feel pretty comfortable to ride it out longer.”

Fed Chair Jerome Powell and other policymakers in recent days have tried to push back against expectations that the US central bank was done with its aggressive rate-hike cycle.

Futures show more than a 68% probability that the Fed cuts its overnight lending rate by 25 basis points or more by next May, according to the CME’s FedWatch tool.

YEN STILL ON INTERVENTION WATCH

The Japanese yen, meanwhile, also gained against the dollar, but less than its peers. The yen JPY= strengthened 0.97% to 150.23 per dollar when earlier coming under pressure after it briefly jumped against the dollar on Monday – having touched a one-year low. The move was attributed to a flurry of trading in options rather than any intervention from Japanese authorities.

DTCC data from LSEG’s Eikon platform shows yen options worth a notional USD 3.5 billion with strike prices between 151.90 and 152 are due to expire between Wednesday and Friday.

Another USD 2.2 billion notional worth of options with strikes between 151.90 and 152 will expire between Nov. 20 and the end of the month.

Japanese authorities in September and October last year intervened in the currency market to boost the yen for the first time since 1998.

“Our base case is that we could have intervention if we break the 152 level for dollar/yen,” said Yusuke Miyairi, an FX strategist at Nomura.

(Reporting by Herbert Lash, additional reporting by Sinead Carew and Chuck Mikolajczak in New York, Alun John in London, Rae Wee in Singapore. Editing by Chizu Nomiyama and Marguerita Choy)

Beware the recoil from funds’ record short Treasuries bet: McGeever

ORLANDO, Florida, Nov 14 – Hedge funds continue to expand their record bearish Treasuries bets at a remarkable rate, but cooling US inflation and expectations that the Federal Reserve will cut interest rates by up to 100 basis points next year could trigger a powerful short-covering rally.

The latest Commodity Futures Trading Commission (CFTC) figures released on Monday, delayed because of the Veteran’s Day federal holiday on Friday, show that speculators dramatically increased their net short positions in two- and five-year Treasuries futures to fresh record levels.

It is unclear exactly what is behind the recent surge. Some experts point to the “basis trade” – a leveraged arbitrage play profiting from price differences between cash bonds and futures – relative value plays on the yield curve, hedges against other trades, or outright directional bets on US interest rates.

Whatever is driving it, the sheer size of the record short positions and the pace at which they are growing suggest the reversal, when it comes, could be powerful.

Following the release of consumer price inflation data for October on Tuesday, the US bond market opened a window into what that might look like. All yields fell sharply, but especially at the short end – two- and five-year yields plunged by 20 basis points or more, marking the latter’s biggest decline since March.

And there is potential for short-covering from CFTC funds that would, all else equal, push yields even lower.

CFTC data for the week ending Nov. 7 show that non-commercial accounts, often seen as a broad grouping of hedge funds and speculators, grew their net short position in five-year Treasury futures by 231,795 contracts to 1.42 million.

That is a record weekly bearish shift, breaking the previous record of 182,686 in the prior week.

Leveraged funds – those more likely to be active in the basis trade – grew their net short position by 149,000 contracts to 2.08 million, a new record. This is the first breakthrough 2 million, and the position has doubled since March.

In the two-year space, non-commercial accounts grew their net short position slightly to a new record 1.454 million contracts, and leveraged funds’ net short position rose substantially to 1.716 million contracts, also a new record.

A short position is essentially a bet that an asset’s price will fall, and a long position is a bet that it will rise. Falling prices for bonds indicate higher yields, and vice versa.

But funds play Treasuries futures for other reasons, such as the basis trade that regulators this year have flagged as a potential financial stability risk. The difference between cash bond and futures prices is tiny, but funds make their money from leverage in the repo market and the sheer volume of trade.

Overnight repo rates have been steady in recent weeks around 5.35%-5.40%, hovering close to the mid-point of the 5.25%-5.50% federal funds target range, as you would expect. Primary dealers’ general collateral overnight lending has risen in recent months, but not dramatically.

If softer inflation and a more dovish US central bank keep yields under downward pressure, funds’ short Treasuries position is likely to come under increasing pressure too.

Economists at Bank of America on Tuesday changed their Fed call and no longer expect a final rate hike in the current tightening cycle, and the bank’s rates strategists recommend going long five-year Treasuries.

“We now think that the hiking cycle is over. The price action today is consistent with our recommendation to be long the UST 5-year point and in 5s30s nominal curve steepeners,” they wrote in a note to clients.

(The opinions expressed here are those of the author, a columnist for Reuters)

(Writing by Jamie McGeever; Editing by Paul Simao)

US Treasury yields have peaked, say strategists for fourth straight month

BENGALURU, Nov 14 – US Treasury yields will fall in coming months, though not as sharply as forecast previously, according to bond strategists polled by Reuters, who said for a fourth month running in even greater numbers that the 10-year note yield had peaked.

Those yield forecast upgrades came after news earlier this month of a ‘blowout’ third quarter for the US economy and signs from Federal Reserve officials they will not be cutting the federal funds rate anytime soon.

The benchmark 10-year Treasury note yield breached the 5% mark last month for the first time since July 2007, more than a full percentage point above its August low of 3.96%.

Yields on 10-year notes have plunged since early October, in part on safe-haven buying on concerns the war Israel launched against Hamas after the Islamist Palestinian group’s Oct. 7 rampage into southern Israel could escalate.

Analysts and bond strategists in a Nov. 8-14 Reuters poll, mostly from sell-side firms, stuck to forecasts of declining yields, albeit less sharply than in polls conducted over the past three months.

The 10-year note yield was forecast to fall 10 basis points to 4.52%, from 4.62% currently, in three months according to the median of 44 strategists, only a fraction of the near-40 basis points falls over a rolling three-month time period in October and September surveys.

“I think 5% is an important psychological level that brings in buyers, and we could drift through that in response to perky inflation or strong labor market data,” said Thomas Simons, senior economist at Jefferies.

“However, I expect the data will take a turn for the worse by January, and more rate cuts will start to be priced into the market, driving yields lower overall.”

The yield was expected to fall to 4.30% by end-April and to 4.00% a year from now, the poll found.

Notably, roughly one-third of respondents expected the yield to tread higher than current levels by end-January, with several big banks on Wall Street changing their views to forecast elevated yields in the near-term.

Yet, when asked whether the 10-year note yield had peaked in the current cycle, an overwhelming 94% majority of respondents, 30 of 32, said it had.

Forecasters were proved incorrect within days of predicting the very same thing in the three previous monthly Reuters polls.

“Why the bond market has been wrong a lot is because they thought the Fed would cut rates pretty aggressively. But, we need to see a hard landing for rates to fall significantly,” said Mike Sanders, head of fixed income at Madison Investments.

Although the timing of the first rate cut has been pushed to mid-2024 from March expected a few months ago, interest rate futures indicate almost 100 basis points of easing through December next year.

The bigger risk to that outlook was for the first rate cut to come later than economists expect, a separate Reuters poll found.

Asked what the main influence on US bond yields would be over the coming six months, analysts were split between a deteriorating fiscal outlook and safe-haven trades.

Other options included quantitative tightening, foreign divestment and the near-term supply of auctioned Treasury debt.

The interest-rate sensitive 2-year Treasury note yield, currently at 5.04%, was expected to decline about 20 basis points by end-January, before falling to 4.00% in a year, according to the survey.

If realized, this would mean a complete reversal of the inverted spread between yields of US 2-year and 10-year Treasury notes – historically a reliable indicator of impending recession – by end-October 2024.

(Reporting by Sarupya Ganguly; Polling by Prerana Bhat, Purujit Arun, Anitta Sunil, and Sujith Pai; Editing by Christina Fincher)

Oil steady; signs Middle East tensions easing offset higher demand forecasts

NEW YORK, Nov 14 – Oil prices were little changed on Tuesday, paring early gains on signs tensions in the Middle East could be easing and uncertainty about US oil inventories.

US President Joe Biden said he was holding daily discussions to secure the release of hostages held by the Hamas militant group and believes it will happen.

Brent futures fell 5 cents to USD 82.47 a barrel, below their USD 84.58 Oct. 6 settlement the day before Hamas attacked Israel. In subsequent weeks, Brent futures traded as high as USD 93.79 per barrel on Oct. 20.

US West Texas Intermediate (WTI) crude held steady at USD 78.26.

“The war premium is going away as it is looking more likely that there will not be a disruption in supply” in the Middle East, said Phil Flynn, an analyst at Price Futures Group.

The White House said Biden’s top Middle East adviser, Brett McGurk, is heading to the region for talks with officials in Israel, the West Bank, Qatar, Saudi Arabia, and other nations.

In early trade, both crude benchmarks rose by over USD 1 a barrel after the International Energy Agency (IEA) boosted its demand growth forecasts and the US dollar fell on data showing inflation was slowing in the world’s biggest economy.

Flynn said crude prices also gave up early gains on Tuesday because the market was uncertain as to what the US oil storage reports would show.

The US Energy Information Administration (EIA) will release its first oil inventory report in two weeks on Wednesday. EIA did not release a storage report last week due to a systems upgrade.

Last week, the American Petroleum Institute (API), a trade group, surprised the market by reporting a huge, bearish 11.9 million barrel build in crude stocks for the week ended Nov. 3. API will release its report for the week ended Nov. 10 later on Tuesday.

For the week ended Nov. 10, analysts forecast energy firms added about 1.8 million barrels of crude into US stockpiles, according to a Reuters poll.

That compares with a 5.4 million barrel withdrawal during the same week in 2022 and a five-year (2018-2022) average build of 1.2 million barrels for this time of year.

DEMAND FORECASTS

The IEA raised its oil demand growth forecasts for this year and next despite an expected slowdown in economic growth in nearly all major economies.

A day earlier, the Organization of the Petroleum Exporting Countries (OPEC) boosted its forecast for 2023 global oil demand growth and stuck to its relatively high projection for 2024.

US consumer prices were unchanged in October as Americans paid less for gasoline, and the annual increase in underlying inflation was the smallest in two years.

Traders bet the US Federal Reserve (Fed) could start cutting interest rates by May, which could boost economic activity and oil demand.

Expectations the Fed could cut interest rates next spring sent the US dollar down to a two-and-a-half-month low against a basket of other currencies. A weaker dollar can boost oil demand by making crude cheaper for buyers using other currencies.

(Reporting by Scott DiSavino in New York, Ahmad Ghaddar in London, and Emily Chow and Trixie Yap in Singapore; Editing by David Goodman, Paul Simao, and David Gregorio)

Yen’s slide to multi-decade lows keeps markets on intervention alert

SINGAPORE, Nov 14 – The battered yen was stuck near a three-decade low against the dollar on Tuesday, struggling to find a floor as the Bank of Japan’s (BOJ) ultra-easy monetary policy settings remained at odds with the prospect of higher-for-longer rates elsewhere.

The Japanese currency similarly slumped to a 15-year low of 162.38 per euro in early Asia trade and slid to a roughly three-month trough of 186.25 per British pound.

Against the dollar, the yen last stood at 151.72, languishing near a one-year low of 151.92 hit on Monday. A break below last year’s trough of 151.94 per dollar would mark a fresh 33-year low for the yen.

The yen had jumped briefly against the greenback in New York hours on Monday after striking the year-to-date low, which analysts attributed to a flurry of trading in options that come due this week.

Despite the BOJ’s carefully orchestrated steps to phase out its controversial yield curve control (YCC) policy and hints of an imminent end to negative interest rates, the piecemeal moves have done little to prop up the yen, particularly as central banks globally maintain their hawkish rhetoric of higher-for-longer rates.

“I think the market has come to the realization that the Bank of Japan is going to exit its policy but at a very, very, very slow and cautious pace,” said Rodrigo Catril, senior FX strategist at National Australia Bank (NAB).

“A weak yen is probably going to stay here for a little bit longer, and the market has been testing to see what the appetite is, particularly for the (Ministry of Finance) and the BOJ, to allow for weaker levels.”

Japanese authorities in September last year intervened in the currency market to boost the yen for the first time since 1998 after a BOJ decision to maintain its ultra-loose monetary policy drove the yen as low as 145 per dollar.

It intervened again in October 2022 after the yen plunged to a 32-year low of 151.94.

INFLATION AND THE FED

Outside of Asia, traders also had their attention on US inflation figures due later on Tuesday, which will provide further clarity on whether the Federal Reserve would need to raise interest rates further to tame inflation.

Fed Chair Jerome Powell and his chorus of policymakers have in recent days pushed back against market expectations that the US central bank was done with its aggressive rate-hike cycle after it held rates steady at its latest policy meeting.

The comments have kept the US dollar bid, and the greenback rose marginally to 105.64 against a basket of currencies.

Sterling steadied at USD 1.22775, while the euro last bought USD 1.0701, having largely traded sideways over the past few sessions.

The New Zealand dollar languished near a one-week low and last stood at USD 0.5879.

“Overall, the market is also kind of worn out by all messages coming from central banks and the higher-for-longer and wait-and-see mode is keeping volatility low,” said NAB’s Catril.

“We need to wait for that CPI number tonight, which could be a bit of a shaker. If it’s strong, then obviously it brings in the idea that another rate hike from the Fed is there.”

Down Under, the Australian dollar edged 0.03% higher to USD 0.63785.

A survey on Tuesday showed Australian business conditions held firm in October even as confidence slipped a little, a resilience that will be tested by higher borrowing costs following a rise in official interest rates last week.

(Reporting by Rae Wee; Editing by Sam Holmes)

It’s raining – or draining? – yen

Nov 14 – The spotlight currently shining on Japan’s yen, and speculation around whether Tokyo will intervene to prevent further depreciation, will likely intensify on Tuesday with traders poised to push the currency to a fresh 33-year low.

Chinese President Xi Jinping’s visit to San Francisco on Tuesday for the Asia-Pacific Economic Cooperation leaders summit – where he will meet US President Joe Biden the next day – will grab much of the news headlines, but probably won’t move markets much.

Before those face-to-face talks, and absent major Asian economic data releases or policy events, the greatest potential for market-moving action on Tuesday could be in currencies.

The yen hit its lowest level in more than a year on Monday, near the key psychological level of 152.00 per dollar, but rallied sharply amid a flurry of options-related trading.

Market participants say there has been no sight of Japanese authorities in the market – not yet, anyway – and Japanese Finance Minister Shunichi Suzuki reiterated that the government will keep monitoring the FX market and respond appropriately.

Currency traders may be tempted to test Tokyo’s resolve again on Tuesday. The policy pressures facing Japanese authorities are intense, and the potential risks to financial markets if policymakers misstep are growing.

After battling against deflation for decades, the Bank of Japan is moving away from ultra-loose policy. It’s a delicate and complicated path to navigate though.

Bond yields are the highest in a decade and rising, the yen is the weakest in decades, stocks are near their highest in more than three decades, and according to Goldman Sachs, financial conditions are the loosest in more than three decades.

As Deutsche Bank’s George Saravelos put it on Monday, normalizing policy and unwinding the world’s biggest carry trade – which he pegs at USD 20 trillion – will not be easy or pain free.

More broadly, investors in Asia go into Tuesday’s session on a reasonably strong footing following Monday’s gains, but with little impetus to add to them.

The MSCI emerging market and Asia ex-Japan indexes both snapped four-day losing streaks on Monday, rising 0.5% and 0.6%, respectively, but trading on Wall Street was listless. It was also listless in US Treasuries, although this is perhaps a good thing given that Moody’s cut the US credit ratings outlook on Friday.

In corporate news, the major earnings releases on Tuesday include Japanese financial giants Mitsubishi UFJ and Sumitomo Mitsui Financial Group, while figures are expected to show that India’s annual wholesale price inflation rate, which has been negative since April, was -0.2% in October.

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

– India wholesale price inflation (October)

– Chinese President Xi Jinping visits the US

– Fed’s Jefferson, Barr, Mester and Goolsbee all speak

(By Jamie McGeever; Editing by Josie Kao)

Gold gains as traders strap in for US inflation data

Nov 13 – Gold prices ticked higher as the dollar eased on Monday, while investors looked toward key US inflation data due this week that could throw some light on the Federal Reserve’s interest rate stance.

Spot gold was up 0.4% at USD 1,945.25 per ounce by 3:30 p.m. ET (2030 GMT). US gold futures settled 0.6% higher at USD 1,950.20.

The dollar index was down 0.2%, making gold more expensive for overseas buyers.

US consumer prices index (CPI) data will be released on Tuesday. According to a Reuters poll, core US CPI is expected to have risen 0.3% month-over-month in October, with a year-over-year increase of 4.1%. Traders will also scan the US producer price index data due on Wednesday.

If the data shows higher-than-expected inflation, gold will likely pull back as that would raise the possibility of another rate hike, said Bob Haberkorn, senior market strategist at RJO Futures.

“But, if data comes in line, gold will trade north of USD 1,950.”

Higher interest rates dull non-yielding bullion’s appeal.

The market is pricing in an 86% chance that the Fed will leave rates unchanged in December, according to the CME FedWatch tool.

Bullion dipped 3% last week as safe-haven demand driven by the conflict in the Middle East eased, while Fed Chair Jerome Powell struck a hawkish tone.

“Going forward, in the short term the investor appetite to add length will rely on the extent of (geopolitical) escalation but (gold) will face headwinds from elevated US real rates,” Goldman Sachs said in a note.

“Tactically, we would view a potential selloff in gold as a buying opportunity as we see an environment with elevated risk channels ahead playing into gold’s hedge qualities.”

Rating agency Moody’s on Friday changed the outlook on the US government’s credit rating to “negative” from “stable”.

Spot silver gained 0.3% to USD 22.29 per ounce.

Platinum climbed 2.8% to USD 863.03 and palladium added 1.5% at USD 977.58, set for its best session in three weeks but still hovering near a five-year low.

(Reporting by Ashitha Shivaprasad and Anushree Mukherjee in Bengaluru; Editing by Pooja Desai, Aurora Ellis, and Shounak Dasgupta)

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