Gold Pares Early Losses, Global Bonds Tumble

April 19th, 2018 by

charting gold priceThe gold price saw a bit of consolidation on Thursday morning. Spot gold cut earlier losses to trade down just 0.1% at $1,348 per ounce.

Spot silver followed up yesterday’s big rally by gaining another 11¢ (+0.65%) to $17.30/oz.

The Platinum Group Metals were also mixed. Palladium dipped 0.4% (-$4) to $1,025/oz and platinum was unchanged at about $940/oz.

Commodities Continue to Rise Amid Selloff in Bonds

Today’s retreat for bonds is being attributed to a stronger global growth outlook.

Bond indices

Bond markets around the world were mixed on Wednesday but fell sharply on Thursday morning.

The 10-year T-note yield is at a two-month high, up about eight basis points this week to 2.91%.

Meanwhile, the lowest tier of high-grade corporate bonds (BBB) is approaching $3 trillion. For perspective, that’s bigger than the annual GDP of the U.K., the fifth-largest economy in the world.

Outstanding BBB-rated corporate debt currently makes up over 42% of the entire investment-grade bond market. Compare this to 26% in 2007—back when rising debt issuance exacerbated the effect of the financial crisis.

Commodities extended their rally on Thursday.

Crude oil continued to climb higher. WTI crude was up 60¢ (+0.9%) to trade above $69 per barrel; Brent crude rose 80¢ (+1.1%) to $74.30/bbl.

Aluminum prices were up another 2.4% to nearly a seven-year high.

Bloomberg’s broader commodity index (BCOM) is just shy of its highest in roughly three years.

Equity Markets and Forex Quiet on Thursday

The Dow Jones was pulled modestly into negative territory yesterday thanks to the worst day for shares of IBM in five years.

Other U.S. indices closed barely in the green on Wednesday. Wall St opened slightly lower on Thursday.

A small rise in the Philly Fed manufacturing index in April bolstered the perception of an improving economic growth outlook.

European stocks traded mostly sideways this morning. Earnings for companies in the euro area were a mixed bag.

Asian shares were up during last night’s session: Japan’s Nikkei 225 and Topix each rose only marginally, but indices in Hong Kong and Shanghai rallied 1.4% and 1.2%, respectively.

The dollar was flat again around 89.55 on the DXY index. The rest of the forex market was likewise about unchanged.

High-volume selling of Bitcoin this week likely coincided with “Tax Day,” but is now abating. BTC was up 0.75% to about $8,200 this morning.

Geopolitics seems to be taking a backseat to general economic news to close out the week.

However, intrigue still surrounds the negotiations with North Korea regarding its nuclear weapon capabilities.

Not only has South Korea’s president, Moon Jae-in, told reporters that Kim Jong Un is committed to a “complete denuclearization” of the Korean peninsula, but it was also revealed that current CIA Director Mike Pompeo had secret face-to-face discussions with the North Korean leader last week.

Pompeo was nominated by President Trump to become the next Secretary of State, pending confirmation by the U.S. Senate.

In Syria’s civil war, President Assad’s forces continue to consolidate territorial gains.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.