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Gold Steady Near One-Month Low as Markets Await US Data, Fed Signals

Gold traded close to a one-month low on Tuesday, with investors focused on upcoming US economic data and Federal Reserve comments to gauge future interest rate decisions. Spot gold held steady at $2,622.89 per ounce after hitting its lowest since October 10. US gold futures rose slightly by 0.4% to $2,629.10. The US dollar remains near a four-month high , making gold less appealing for holders of other currencies. Key data releases, including the US Consumer Price Index on Wednesday and Producer Price Index on Thursday , could shape the outlook on inflation and influence Fed policy. Gold prices have faced pressure since Trump’s presidential victory , with potential policy shifts hinting at higher inflation and extended high interest rates. Although the Fed recently cut rates by 25 basis points, another cut may follow in December , with a 66% likelihood according to market estimates. Gold, traditionally a hedge against inflation, often loses its appeal when interest rates rise , as h

Markets Brace for US Election and Fed Meeting in High-Stakes Week

Financial markets are preparing for a potentially volatile week with two major events on the horizon: the US presidential election on Nov 5 and the Federal Reserve’s meeting on monetary policy. Both events could significantly influence market dynamics, as investors monitor the race between Republican Donald Trump and Democrat Kamala Harris and the Fed's latest stance on interest rates. Trump Trades and Election Volatility: The so-called “Trump trade” has gained traction, with the US dollar rising and Treasury bonds selling off , reflecting hopes for potential deregulation under a Trump win. In contrast, Harris is seen as supportive of clean energy stocks , which may rally if she prevails. Investors are also closely watching the impact of congressional control and the possibility of contested results, both of which could drive market swings. Fed's Policy Decision and Economic Data Impact: The Fed’s upcoming policy decision, expected to be a 25 basis point rate cut , may affect

US Bond Market Faces 10-Day Test Amid Selloff, Election, and Fed Decisions

The US bond market, already reeling from its worst selloff in six months , is about to face a pivotal 10-day stretch that could set the tone for the rest of the year. Kicking off this critical period is the Treasury Department's announcement on Wednesday, revealing the scale of upcoming debt sales, followed by the monthly payroll report on Friday , which will provide key insights into the health of the economy and potential for further interest rate cuts by the US Federal Reserve . Adding to the tension is the Nov 5 presidential election and the Federal Reserve's meeting on Nov 7 , which will be its first since it began easing monetary policy in September. Treasury prices have fallen sharply over the past month, with concerns growing that the continued strength of the US economy will limit how deeply the Fed will cut rates. Investors are particularly wary of a Donald Trump election victory , which could drive yields higher due to speculation that his policies, such as tax

Cheaper Energy Products Depress US Import Prices in September, Supporting Fed's Rate Cut Path

US import prices fell by the most in nine months in September, driven by a sharp drop in energy costs, signaling a benign inflation outlook that keeps the Federal Reserve on track to continue cutting interest rates. According to the Labor Department , import prices excluding fuel barely rose over the past three months, offering further evidence that inflationary pressures are muted. Import prices slipped 0.4% last month , the largest drop since December 2023, after a revised 0.2% decline in August. The 12-month decline was 0.1% , marking the first annual drop in seven months. The cost of imported fuels and lubricants plunged 7% , driven by a 7.1% fall in petroleum prices and a 14.5% drop in natural gas prices . Excluding fuel, import prices inched up 0.1% for the third consecutive month. Food prices also declined 1.5% , largely due to a 12.2% drop in vegetable prices . Excluding both fuel and food, core import prices rose 0.3% , signaling stable underlying costs. The data support

Trump Defends Tariff Plans and Push for Fed Influence Ahead of Election

Republican presidential candidate Donald Trump defended his economic agenda during a speech at the Economic Club of Chicago , arguing that his proposed tariff increases and closer consultations with the Federal Reserve would drive substantial growth, despite economists' warnings that his policies could spur inflation and increase the national debt. Trump dismissed concerns that tariffs could disrupt supply chains or burden consumers, insisting that higher levies would prompt companies to return manufacturing to the U.S. He also downplayed worries about the economic impact of deporting millions of undocumented migrants, claiming legal migration would offset the labor shortage. “We are all about growth,” Trump said, receiving applause for his promise to protect American companies and bring jobs back . Trump, whose proposals include a 60% tariff on Chinese imports and 10% duties on all other imports , argued that tariffs would prevent foreign countries from undermining key U.S.

Fed’s Goolsbee Reiterates Need for Significant Rate Cuts Over Next Year

Austan Goolsbee , President of the Federal Reserve Bank of Chicago , emphasized on Thursday that interest rates need to come down significantly over the next 12 months . Goolsbee highlighted that while inflation has cooled and is nearing the Fed’s 2% target, the central bank’s focus has now shifted to maintaining stability in the job market , where the unemployment rate currently sits at 4.2% . In an interview on WBEZ , Goolsbee stated, "Rates need to come down over the next 12 months by a lot," reiterating that the Fed is now concentrating on preventing further increases in unemployment while keeping inflation under control. Last month, the Federal Reserve cut interest rates by a half percentage point , marking its first rate reduction since the pandemic began. This larger-than-expected move was aimed at supporting the slowing labor market . As the November Fed meeting approaches, officials are expected to implement smaller, quarter-point cuts , though the extent of any red

Fed's Kashkari Backs 50 Basis Point Rate Cut Amid Shifting Economic Risks

Minneapolis Federal Reserve President Neel Kashkari voiced his support for the recent 50 basis point rate cut , calling it the "right decision" in light of progress on inflation and the risk of rising unemployment. Kashkari, known for his previously hawkish stance, noted that the balance of risks has now shifted away from inflation and towards a potential weakening in the labor market . "The balance of risks has shifted... warranting a lower federal funds rate," Kashkari said, referring to the Fed's main policy lever . He acknowledged that despite the rate cut, the overall stance remains restrictive. Last week, the Federal Reserve cut its policy rate by half a percentage point to the 4.75%-5.00% range, surprising many analysts with the larger-than-expected move. Kashkari, who is not one of the Fed's voting policymakers this year, had previously been cautious about cutting rates too quickly, but now sees this move as appropriate given the disinflationary p

Biden Predicts Continued Fed Rate Cuts as Inflation Eases

US President Joe Biden expressed confidence that the Federal Reserve will continue cutting interest rates, a move he hailed as beneficial for American consumers. Speaking at an Economic Club of Washington event on Thursday, Biden emphasized his administration’s ongoing efforts to lower costs for Americans and highlighted the progress made in bringing inflation closer to the Fed's 2% target . " Interest rates are going to be coming down and they're expected to go down further. That's a good place for us to be," Biden remarked. He welcomed the Fed's half-percentage-point rate cut on Wednesday, calling it "good news for consumers" but acknowledged that more work is needed. Biden’s administration has focused on expanding domestic manufacturing , investing in clean energy and infrastructure, and capping drug costs for seniors. These policies have contributed to the creation of 16 million jobs and rising wages, according to Jeff Zients , the presi

S&P 500 Reaches Record High Amid Economic Optimism and Fed Rate Cuts

Wall Street traders, optimistic that the Federal Reserve (Fed) will achieve a soft landing for the US economy, fueled a rally in riskier assets, driving the S&P 500 to a new all-time high. The index climbed 1.7% , marking its 39th record in 2024 and pushing this year's gains to approximately 20%. Tech stocks led the charge , while more defensive sectors lagged. The Nasdaq 100 rose 2.6% , and small caps in the Russell 2000 gained 2.1% . The rally occurred as traders braced for the quarterly "triple witching" event, which involves the expiration of derivatives contracts tied to stocks, index options, and futures. This could lead to increased market volatility, with US$5.1 trillion set to expire on Friday, coinciding with benchmark index rebalancing. The Fed's decision to cut interest rates by 50 basis points re-ignited hopes that it can stave off a recession. Data released Thursday showing a decline in jobless claims to their lowest level since May bolst

US Equities Close Lower Amid Choppy Trading Following Fed Rate Cut

US stocks ended with modest losses on Wednesday, retreating from intraday highs after the Federal Reserve (Fed) cut interest rates by 50 basis points , marking its first cut in over four years. While the S&P 500 , Dow Jones , and Nasdaq all initially surged after the announcement, they later pared gains and closed in the red. The Fed cited "greater confidence" that inflation is moving toward its 2% target , and the rate cut aimed to keep the labor market healthy . However, the market response was volatile, with the S&P 500 swinging between gains and losses before ultimately finishing 0.29% lower . The Dow Jones fell 103.08 points (0.25%) to 41,503.10 , and the Nasdaq lost 0.31% to close at 17,573.30 . Although the market had been pricing in a 25-basis-point cut earlier in the week, expectations shifted to a 57% chance of a 50-basis-point cut on Wednesday, according to CME’s FedWatch Tool . Investors are now fully expecting at least another 25-basis-point cut

Hong Kong Cuts Rates for First Time in Four Years Following Fed's Easing

The Hong Kong Monetary Authority (HKMA) has cut its base interest rate by half a percentage point to 5.25% , marking its first rate reduction since 2020. The move comes in response to the Federal Reserve's recent policy easing, as the city's currency is pegged to the US dollar. This decision is expected to loosen borrowing conditions in the financial hub, providing relief to businesses and consumers grappling with years of steep borrowing costs. The Fed's own half-point rate cut hours earlier set the stage, though Fed Chair Jerome Powell warned against assuming the reduction would continue at the same pace. Traders, however, are betting on further US rate cuts, with another 70 basis points of reductions expected at the Fed’s two remaining meetings this year. Hong Kong's rate cut comes at a crucial time for its economy, which has been weighed down by high borrowing costs and a struggling real estate market , with property prices at their lowest since 2016. The mov

Oil Prices Steady as Investors Await Fed Rate Decision

Oil prices remained stable on Wednesday, following gains in the previous two sessions, as investors focused on the anticipated US Federal Reserve (Fed) interest rate cut and potential geopolitical tensions in the Middle East . Brent crude futures for November fell slightly by three cents to US$73.67 per barrel, while US crude futures for October slipped by 11 cents, or 0.2%, to US$71.08 per barrel at 0053 GMT. Both contracts had increased by around US$1 per barrel on Tuesday due to ongoing supply disruptions in the US following Hurricane Francine and market speculation about rising demand following what could be the Fed's first rate cut in four years. The market was also buoyed by concerns over potential output disruptions in the Middle East after Israel allegedly attacked militant group Hezbollah in Lebanon with explosive devices, heightening tensions in the region. "Markets have calmed down as concerns over hurricane damage and escalating tensions in the Middle

Global Shares Rise as Fed Rate Cut Bets Weigh on Dollar

European stocks rose on Tuesday while the US dollar remained under pressure, as investors anticipated a potentially aggressive rate cut from the US Federal Reserve (Fed) . With the Fed expected to begin its easing cycle, markets have increasingly priced in the possibility of a 50-basis-point rate cut . Futures markets have fully priced in a quarter-point cut and now show nearly a 70% probability of a half-percentage-point rate cut on Wednesday, up sharply from around a 15% chance last week. This shift comes after multiple media reports suggested more aggressive monetary easing. The prospect of a deeper rate cut has boosted risky assets and driven down the dollar and bond yields. "It's back to the Fed put," said Eddie Kennedy , head of discretionary fund management at Marlborough Investment Management . "Everyone's pricing in the soft landing... Generally, stocks have done well in such environments." The pan-European STOXX 600 was up 0.5% to a two-

"Blunt" Interest Rates Raise Doubts About Fed's Easing Effectiveness

If the steep interest rate hikes over the past two years had little effect in slowing the US economy, it's worth questioning whether reversing these rates will have much impact in a downturn. One of the perplexing observations over the past two years has been how the Federal Reserve's (Fed) rate hikes — totaling five percentage points between March 2022 and July 2023 — have done little to dampen overall economic activity. Despite the higher borrowing costs, US real gross domestic product (GDP) has maintained annualized growth rates above 2% in seven out of eight quarters since mid-2022 and is set to continue this trend through the end of September. Additionally, the stock market remains near record highs, suggesting that the economy may have become less sensitive to changes in short-term borrowing costs . If this trend holds, policymakers could face challenges if a future slowdown — or even a cyclical recession — proves similarly resistant to monetary policy easing . Why t

Fed Officials Advocate for Gradual Rate Cuts, Emphasizing Caution Amid Economic Cooling

Two Federal Reserve officials have signaled that it may soon be appropriate to begin lowering interest rates, advocating for a "gradual" and "methodical" approach to the pace of cuts. Boston Fed President Susan Collins and Philadelphia Fed President Patrick Harker both highlighted the importance of cautious action to maintain economic stability while continuing to address inflation. Key Takeaways: Gradual and Methodical Rate Cuts : Both Collins and Harker stressed the need for a gradual pace of rate cuts, starting soon, to ensure that the U.S. economy remains stable. Collins emphasized that she sees no major economic "red flags," suggesting that a cautious approach to easing is appropriate to preserve the labor market while continuing to bring inflation down. Divergence Among Fed Officials : While Collins and Harker are aligned on the need for gradual easing, Kansas City Fed President Jeffrey Schmid expressed more caution. Schmid indicated that he is not

Fed Minutes Reveal Consideration for July Rate Cut, Highlight Shift in Policy Approach

The minutes from the Federal Reserve's July 30-31 meeting, released on Wednesday, indicate that several Fed officials saw a plausible case for cutting interest rates during the meeting, although the committee ultimately voted unanimously to keep rates steady. This discussion reflects a growing sense among policymakers that the risks to achieving the Fed's inflation and employment goals are becoming more balanced, even as borrowing costs remain at a two-decade high. Key Takeaways: Consideration for Rate Cuts : Several Fed officials believed there was a reasonable case for a 25 basis-point rate cut in July due to recent progress on inflation and rising unemployment rates. However, the committee decided to wait for more data before making such a move. The minutes suggest that if economic data continues to align with expectations, a rate cut could be appropriate at the Fed's next meeting in September. Shifting Risk Management Focus : The discussion among policymakers indicates

Wall Street Ends Higher as Fed Minutes and Jobs Data Bolster Rate-Cut Expectations

US stocks advanced on Wednesday as investors digested a significant downward revision in payroll data and the minutes from the latest Federal Reserve (Fed) meeting, which solidified expectations for a rate cut in September. The trading was relatively range-bound, with all three major US stock indexes closing modestly higher, led by gains in technology stocks. Key Takeaways: Market Performance : The Dow Jones Industrial Average rose by 55.52 points (0.14%) to 40,890.49. The S&P 500 gained 23.73 points (0.42%) to 5,620.85. The Nasdaq Composite added 102.05 points (0.57%) to 17,918.99. Fed Minutes and Economic Data : The Fed minutes from the July meeting indicated that members were already leaning toward a rate cut, which has bolstered market confidence that a rate reduction could happen in September. The Labor Department’s preliminary revision to payroll data showed a steep downward adjustment, lowering the originally reported 2.9 million job additions by 818,000 for the 12 months

Asian Shares Rise, Dollar Weakens as Fed Prepares for Rate Cuts

Asian shares edged higher on Thursday, buoyed by expectations of imminent interest rate cuts by the US Federal Reserve. The US dollar, meanwhile, was pinned to one-year lows against the euro and sterling following the release of Fed minutes that signaled policymakers were ready to begin reducing rates. Key Takeaways: Market Reactions to Fed Minutes : The Fed minutes indicated that a "vast majority" of policymakers were inclined to support a rate cut in September, provided economic data aligned with expectations. This news led to gains in US stocks, a rally in bonds, and a weakening of the dollar. Asian markets followed suit, with the MSCI Asia-Pacific index rising 0.2%, Japan's Nikkei up 1%, and Hong Kong's Hang Seng gaining 0.7%. Currency Movements : The euro rose to $1.1151, reaching as high as $1.1173 overnight, its strongest level since mid-2023, while sterling hit a more than one-year high at $1.3119. The dollar’s decline was driven by the Fed's clear signa

Private Credit Prepares for Lower Rates and Declining Returns

The anticipated shift by the Federal Reserve towards lowering interest rates next month is posing a significant challenge for the private credit sector, which has thrived during the recent period of high interest rates. As rates decrease, returns in this $1.7 trillion market are expected to decline, leading to a potential slowdown in an industry that has experienced substantial growth in recent years. Key Takeaways: Impact of Lower Interest Rates on Returns : Private credit deals, typically set at floating rates, have benefited from the high-interest environment, allowing lenders to secure higher yields and surpass hurdle rates more easily. However, with the Fed expected to lower rates, these returns are likely to diminish. Lenders may find themselves waiting longer to begin drawing profits from their funds as margins are squeezed, making it more challenging to achieve the initial return hurdle, typically around 5% to 7%. Pressure on Loan Margins and Credit Quality : In addition to s

Trump Defends Fed Criticism, Considers Aid for Homebuyers

Former President Donald Trump defended his past criticisms of the U.S. Federal Reserve (Fed) and hinted at the possibility of offering aid to prospective homebuyers struggling with high mortgage costs. Key Points: Fed Criticism: Trump downplayed concerns that his comments about the Fed could undermine its autonomy, stating that as president, he should be able to freely express his views on interest rates. He acknowledged that while he "jawboned" with Fed Chair Jerome Powell during his presidency, it was unclear if his comments had any effect. Homebuyer Aid: Amid discussions on high interest rates affecting mortgage affordability, Trump suggested he might consider offering assistance to prospective homebuyers struggling to afford a down payment. This comes in contrast to Vice President Kamala Harris's proposal to provide first-time buyers with $25,000 in down payment assistance, which Trump criticized as potentially worsening housing shortages and raising prices. Fed Ind

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