The precious metals saw some light profit-taking as they begin to run up against technical resistance following the recent rally for gold. Spot gold traded unchanged around $1,319/oz on Monday in spite of a stronger U.S. dollar. Spot silver fell 9¢ (-0.5%) to $17.08 per ounce. Platinum and palladium were both flat around $970/oz and $1,090/oz, respectively.
The dollar finally showed some positive momentum, trading 0.4% higher to 92.3 on the DXY index. This knocked the euro back down to $1.1975, its biggest drop in six weeks. The common currency was weighed down in part by the ongoing uncertainty over what coalition of political parties will run the German government.
Meanwhile shares were actually up 0.3% in Germany and France while the EURO STOXX 600 rose by the same proportion. London’s FTSE 100 traded slightly lower. Stocks were up overnight in Asia and Australia. Wall St will again look to hit new all-time highs but opened modestly lower on Monday morning. The first reports of 2017 corporate earnings will be coming up this week.
Investors are crowding into the stock market at the fastest clip since 2000, on the eve of the infamous “dot-com bubble.” Last year, the S&P 500 closed every single month higher than the last. This is the first time in history this has happened in all 12 months of a calendar year. There are also a number of signs that equities are “overbought” in virtually ever corner of the world. Most indices have gained 20% to 30% over the past 52-week period and the Shiller PE ratio, a popular measure of price-to-earnings, is at similar levels to “Black Tuesday” in 1987, when stocks crashed more than 20%.
One potentially overlooked factor may be the (albeit unlikely) potential for a government shutdown in the U.S. The issue was delayed three times in 2017 through short-term continuing resolutions (CRs) to fund the government temporarily. While such budget battles have become commonplace on Capitol Hill, it’s worth noting that funding the government through a series of CRs rather than a proper budget opens up inevitable inefficiencies.
U.S. bonds received some slight demand on Monday, sending the 10-year T-note yield down one basis point to 2.46%. Oil prices nudged higher as WTI crude added 0.3% to trade at $61.60/bbl. The cryptocurrency market continued to experience significant volatility. After rallying better than 10% on Friday, bitcoin prices tumbled 11.2% to below $14,400 this morning. The cryptocoin may have been dealt a blow by certain global institutions rejecting its free use: an Egyptian mufti released an opinion that bitcoin is illegal within Islam, the Indian government announced it would heavily tax bitcoin transactions, and China and Israel have even moved to outlaw bitcoin trading within their respective countries.
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