While shares jumped in Greece thanks to the European Commission okaying the proposed deal to extend the country’s bailout assistance funds, stocks were largely idle in the States as the markets await Janet Yellen’s testimony before the Senate Banking Committee today. Considering the economic uncertainty and anxious sentiment floating around in the first two months of the year, it would be a bit surprising if the Fed Chair offered a hawkish report to Congress over the next two days. To this point, Fed policy has continued to encourage a risk-off environment, as investors tend to expect the federal funds rate to remain abnormally low for at least the next 6 months. Though crude oil prices were up about 1.25% this morning, the precious metals were all barely in the red.
Yesterday in the Markets
The precious metals remained flat again on Monday, while stocks continued last week’s trend: the Dow Jones Industrials and the S&P 500 were both slightly in the red while the Nasdaq churned along, notching its 9th straight day in positive territory.
Factors Affecting Gold Today
With the EC accepting the list of measures put forward by the Greek administration to reform the terms of its bailout, the current deal between Greece and eurozone finance ministers is finally and formally in effect. Greek stocks zoomed toward new 2015 highs–which likely wasn’t that difficult to achieve–while European shares also edged higher. Greece now has secured at least four more months of funding from its European creditors, but can perhaps save face politically at home by pointing to the reformed compliance measures and the relative length of the extension (not 6 months). In the interim, the Greeks still must hash out a longer term agreement to deal with the country’s finances and remain in the eurozone.
Despite yesterday’s announcement of a 4.9% drop in existing home sales, data from December showed that home prices rose in 20 cities across the U.S., while the S&P/Case-Shiller property value index rose 4.5% year-over-year; around the nation, the average increase in home prices was 4.6% last year. With fewer houses available for sale, it stands to reason that market forces would drive prices higher on the greater scarcity, even if demand still somewhat lags. Treasury yields have steadied, while the dollar eased a bit on oil’s gains. After falling back, crude oil prices bounced again today, with Brent crude rising 2% to vaunt $60/bbl again, and WTI adding 1.25% to inch above the $50/bbl mark.
It seems HSBC isn’t the only bank receiving flak for alleged precious metal price manipulation; multiple sources are indicating that the U.S. Department of Justice will pursue no less than 10 major world banks through its anti-trust division in an investigation into manipulating the precious metal markets, particularly gold, silver, and platinum. In addition to HSBC, banks profiled in the investigation are expected to include JPMorgan Chase, Goldman Sachs, Barclays, Standard Bank group, the Bank of Nova Scotia, Switzerland’s UBS and Credit Suisse, France’s Societe Generale, and Germany’s Deutsche Bank. The Commodity Futures Trading Commission (CFTC) will also be involved in the investigations, as they have opened a civil case against the financial institutions.
Chair Yellen resumes her testimony before Congress by speaking to the House Financial Services Committee tomorrow. New home sales numbers and the EIA petroleum status report will also be released.