Gold, which was already under pressure from a hawkish outlook by the Fed regarding the timing of interest rate hikes, was pushed down another $5 an ounce to test the $1,275 level upon a better than expected first-time jobless claims report.
The ranks of the newly-unemployed rose only 298,000 last week, 14,000 fewer than expected. Since the Fed’s last remaining goal before reversing an unprecedented six years of near-zero interest rate policy is an improving labor market, traders and speculators are getting the jitters about the end of the party coming sooner than later.
Silver apparently hit its low for the day in early London trading, rallying to near-unchanged early in New York. Platinum is continuing a slow consolidation that started with a drop on Monday, while palladium is working on building a new floor in the $870 area after profit-taking was trigger by a rise over $900 on Friday.
The dollar rose over an 11-month high overnight, sparking a little bit of profit-taking of its own, but has recovered to unchanged this morning. The euro is still languishing at 11-month lows, which is supporting the dollar. ECB president Mario Draghi must be happy, as a the central bank’s focus has been on weakening the euro in order to head off a deflationary spiral. Perhaps he’ll let us know how he feels about the situation tomorrow, when he speaks at the global central bank conference in Jackson Hole, WY. Janet Yellen is slated to speak as well, and with the recent hawkish tone of last month’s FOMC meeting, the market watchers will be hanging on her every word.
BIG news in the banking world, as Bank of America/Merrill Lynch pays a $16.6 BILLION fine to the U.S. government, to avoid a criminal trial over rampant mortgage fraud by two companies it bought out. This is the largest fine in U.S. history against a single company, and is almost equal to the last three years of profits at BoA.ML. The Wall St. Journal reports that BoA/ML has already paid more than $60 billion in fines before this verdict, to make charges of illegal activity go away.
The “too big to fail” bank is crying that it is a victim of crimes perpetrated by Countrywide Financial and Merryll Lynch before Bank of America bought them. Perhaps someone should have done due diligence, or maybe someone thought they’d never be charged?
Stocks are seeing slight gains in Europe and the U.S., while the Hong Kong and Shanghai exchanges fell on news that Chinese PMI fell. The Nikkei in Tokyo hit a 3-week high on yesterday’s good economic news out of the U.S., and a yen that is easing. A weaker yen helps Japanese exporters.
The big news tomorrow with be the speeches by Janet Yellen and Mario Draghi. Nothing else of note is on the economic calendar.