A rising U.S. dollar dinged commodity prices on Tuesday morning.
Focus remained on Capitol Hill, where the new Fed chair gave his first of two days of testimony before Congress.
Platinum was also down 1% to $988/oz. Spot palladium was initially flat but slipped to $1,042/oz.
Markets Shrug Off Weak Buying of Business Equipment
Aside from tracking everything the “Fed Heads” are saying (even about one another), U.S. markets had plenty of new economic data to digest on Tuesday.
Government data showed an unexpected decline in durable goods orders last month. This is a measure of new purchases of heavy equipment by American industries.
Orders were down 3.7% in January. A separate measure of new business investment fell for back-to-back months after declining in just two out of 12 months last year.
Recent adjustments to the tax code may be causing companies to delay certain investments.
The trade deficit also likely widened in January. More data on trade will be released next week.
Inventories for wholesalers and retailers both rose sharply month-on-month. It may be a sign that exports are not keeping pace with imports.
A bigger trade gap would be a drag on gross domestic product (GDP) for the first quarter of 2018.
Nonetheless, equity markets opened slightly higher in New York. U.S. stocks once again rallied in the last hour of Monday’s session.
Tech stocks Amazon and Netflix are each trading at record-highs.
Shares in Asia were mixed: Japanese indices gained about 1% but stocks slumped in Shanghai and Hong Kong.
European markets traded mostly flat.
There is growing speculation that the European Central Bank (ECB) may end its bond-buying program (i.e. quantitative easing) as soon as this year.
However, ECB President Draghi has consistently reiterated his willingness to step in with more stimulus—and for a longer period—if necessary.
Powell Strikes Balanced Tone In Washington
In other central banking news, Fed Chair Powell is speaking before the House of Representatives today.
Powell walked a fine line in prepared testimony he gave to the House Financial Services Committee. He emphasized gradually raising interest rates and not allowing inflation to overheat.
In a very Yellenesque fashion, Powell equivocated between promoting growth and closely monitoring inflation.
Ultimately, like his predecessor, Chair Powell managed to say virtually nothing.
The Fed leader will also speak before the Senate Banking Committee on Thursday.
Foreign exchange markets interpreted the steady message from Powell as dollar-positive. The DXY index rose 0.45% to trade above 90.0 for the first time in over two weeks.
Meanwhile, the euro, pound sterling, and yen were all off modestly against the USD.
Commodities were likewise down due to the stronger dollar, the precious metals included. Copper futures tumbled nearly 1% to below $3.19/lb.
Crude oil futures fell about 0.3% on anticipation of higher inventories in the U.S. The Baker Hughes rig count is near a three-year high.
WTI is still close to a three-week high at $63.70/bbl. Brent crude was down 14¢ (-0.2%) to $67.35/bbl.
Bonds were steady as the 10-year Treasury yield was mostly unchanged at 2.85%.
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