Global markets took prepared remarks from Fed Chairman nominee Janet Yellen which were released early as a sign that the QE party will continue, and rallied on the news. The remarks, which she was scheduled to make this morning before the Senate Banking Committee, were released shortly before the New York close.
Gold jumped $15, and held onto the gains overnight. Silver traded mostly flat overnight. Platinum had a modest rally overnight, with a spike upwards at the New York open this morning that prompted profit-taking. Palladium is trading slightly below yesterday morning’s levels, but did recover overnight from a late drop yesterday in New York.
The Nikkei did especially well again today, as the Yellen remarks combined with a Bank of Japan official saying that currency intervention was still on the table, AND Japanese third quarter GDP beat estimates, coming in at +1.9%. The Nikkei saw its highest closing price in six months before it was all over. Earnings reports and the Yellen news also helped Hong Kong and mainland Chinese stocks post gains.
The rally in Europe was pretty much negated when it was reported that the Eurozone came within a whisker of slipping back into recession in the third quarter, posting a miniscule 0.1% gain. The European Central Bank reiterated that it stood by to support the economy if needed, which helped prices a bit.
The dollar, which sank on Yellen’s apparent promise of QE for the foreseeable future, recovered into positive territory in early morning trading, First-time jobless claims for last week were a big disappointment to the market, only shrinking by a meager 2,000 applications. Analysts had expected a much larger 11,000 drop. Last week’s numbers were revised upward by 5,000 applications, cutting the 9,000 reduction by more than half. Curiously, last week, the previous week’s numbers were also revised upwards by 5,000 applications.
In other economic news, the U.S. trade deficit grew by 8% last month, essentially ensuring that GDP estimates will be revised downward. Yellen’s live testimony began this morning at 10am Eastern time, so don’t be surprised by sudden movements in the markets today.