Gold prices pulled above unchanged this morning, after the Empire State Manufacturing Index was reported to have dropped to a -6.8 in October, compared to a -2.0 in September. Economists expected a recovery to +2.0. The dollar eased below unchanged before the New York open on the news, lessening its pressure on gold and oil.
At 10am in New York, spot gold is trading at $1,254.60 an ounce, up $4.10 and down from the morning high of $1,258.00. Spot silver is down one cent at $17.37, down markedly from the morning’s $17.54 high.
Bond yields worldwide rose again this morning, as debt markets remain jittery after Fed Chair Janet Yellen’s speech Friday that hinted the Fed may let the US economy push inflation past the central bank’s 2% target. Fed funds futures rates point to only a 7% chance of a rate hike right before the election, but a 65% chance of a December hike.
British bonds are being pressured by fears that Prime Minister Theresa May actually has no plan for Brexit, and by the pound sterling languishing at three-decade lows. The devalued pound is greatly increasing import prices, and had already led to a food scare. Food giant Unilever recently demanded 10% more for its products from grocery chain Tesco to offset losses caused by the shrinking sterling. This resulted in hundreds of Unilever products disappearing from Tesco shelves, including that cultural staple Marmite.
European Central Bank chief Mario Draghi wishes that he had some of that inflation, as the ECB’s $88-billion-a-month money printing scheme has had little effect on the broader EU economy so far. Economists are now betting that the central bank will extend the bond-purchasing program past the March 2017 end date.
Oil prices are once again caught between OPEC dreams and rig-count realities. Traders are hoping against hope that Saudi Arabia, Iran, and Russia can lead the way to a global reduction in oil production, but US shale drilling companies will act as a pressure valve on oil prices, increasing production if prices get near $60 a barrel.
Stocks fell after the open on Wall St, despite Bank of America and Charles Schwab both beating earnings expectations. They follow Asian and European stocks lower.
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