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Market News Gold trading reminder: The U.S. dollar and U.S. bond yields have soared together! The price of gold keeps falling, the sword is pointing to 1,700?
Gold trading reminder: The U.S. dollar and U.S. bond yields have soared together! The price of gold keeps falling, the sword is pointing to 1,700?
In the Asian session on September 29, spot gold held steady at around 1734. The price of gold fell to a seven-week low on Tuesday, mainly because the yields of the U.S. dollar and U.S. Treasuries continued to soar. The gold price may continue to fall under pressure in the market outlook and test the 1700 mark support level.
2021-09-29
11717
On Wednesday (September 29) Asian time, spot gold held steady at around 1734. On Tuesday (September 28), the price of gold fell by more than 1% to a seven-week low as the yields of the US dollar and U.S. bonds jumped due to early interest rate hike bets. However, the continuous decline in consumer confidence and the sharp correction of the stock market limited the decline in gold prices. .
Continue to pay attention to the speeches of many officials of the Federal Reserve, including Chairman Powell, who will also make an appearance. In addition, the election of the Japanese prime minister is also worthy of attention.
[Usage of the Fed's overnight reverse repurchase program reached a record high of US$1.365 trillion]
The use of the Fed's overnight reverse repurchase program reached a record high, and investors dumped Treasury bills that may face default because Congress did not raise or suspend the debt ceiling in time.
New York Federal Reserve data showed that 83 participants in the reverse repurchase market overnight used a total of US$1.365 trillion on Tuesday, exceeding the record high of US$1.352 trillion set on September 23.
After U.S. Treasury Secretary Yellen warned that the government might run out of cash by October 18, Treasury bills that expired in mid-October were sold off, and market demand for the Fed’s overnight reverse repurchase tool soared.
TD Securities strategist Gennadiy Goldberg said, "There is nowhere else for cash in the market. We can now include Treasury bills related to the expiration of the debt ceiling into the avoidance list."
The yield of Treasury bills due on October 19 rose to 0.075%. Investors avoid Treasury bills that expire in late October and early November because they are considered to be delayed in redemption.
Jefferies economist Thomas Simons said: "This is the first time they have given us specific time."
Before Yellen released the latest forecast, it was difficult for the Treasury Department and Wall Street strategists to predict the so-called "X-day", that is, the day when the government defaults if the debt ceiling is not complied with. The Bipartisan Policy Center stated in a new analysis on September 24 that the final date for members of Congress to raise or suspend the debt ceiling will be between October 15 and November 4.
George Goncalves, head of US macro strategy at MUFG Securities, said that the longer Congress drags on raising or suspending the debt ceiling, the more risks will begin to rise sharply .
[St. Louis Federal Reserve Bank Chairman: The Fed should shrink its balance sheet in 2022]
St. Louis Federal Reserve Chairman Brad said that the Fed should begin to reduce its balance sheet of about 8 trillion US dollars as soon as it ends its bond purchase plan next year , reminding the Fed that it may need more aggressive measures to cope with high inflation, including raising interest rates twice next year.
Brad said in an interview that he currently expects the inflation rate to remain at 2.8% until next year, well above the Fed’s 2% target and the highest among Fed officials’ latest economic forecasts released last week.
Although Brad stated that he agrees that inflation will ease on its own to a certain extent, he said that the central bank needs to make more efforts to ensure its smooth progress without the need to adopt restrictive policies that may jeopardize the current expansion.
Inflation "will remain above the target during the forecast period." This is a good thing. We are realizing our...framework," Brad said of the Fed’s forecast last week. The Fed expects that even if interest rates remain below what is considered restrictive, inflation will remain above 2% until 2024. .
The Fed’s new framework seeks to allow inflation to rise above the target for a period of time to offset the low inflation of the past 10 years. Nevertheless, this year's inflation jump has surprised officials. It seems that inflation may last longer than initially expected.
"The risk now is that inflation will rise above the target too much and last too long... How high do we want inflation to be?... This is the key issue for (the Federal Open Market Committee) next year."
[Chairman of the Atlanta Fed: The US job market is in a state of "chaos", but the economy is still on track to fully recover]
Atlanta Fed President Bostic said on Tuesday that the U.S. labor market is in a state of "chaos," and workers are addressing child care issues and responding to the spreading epidemic, but the United States is still on track to fully recover.
"There are a lot of adjustments, a lot of chaos and turmoil." When people return to work, they have to deal with family responsibilities, companies turn to automation during labor shortages, and the new crown crisis continues. Bostic's mid-sized bank in the United States The alliance said in a speech, "But in the final analysis, the economic development trajectory is stable. My model and the data I see show that we are steadily moving towards a full recovery. Even with the increase in DELTA cases, the growth momentum will continue. Strong. "
[The U.S. dollar rose to a 10-and-a-half-month high, boosted by the sharp rise in U.S. bond yields]
The U.S. dollar surged to a high in more than 10 months on Tuesday, following the upward trend in U.S. Treasury yields, as investors expected the Fed to announce in November that it would start to reduce the pace of asset purchases and may raise interest rates thereafter.
(Daily chart of the US dollar index)
The Fed's hawkish stance at the monetary policy meeting last week strengthened the market's view that the Fed would start to cut back on bond purchases earlier than expected, which accelerated the rise in yields.
Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said: "As inflation expectations have suppressed the relative attractiveness of public debt, yields have generally risen, but U.S. bond yields have risen faster because traders are betting on the actions of the Federal Reserve. Will be faster than other central banks in the world."
"Interest spreads are tilting towards the U.S. dollar, driving down low-yielding currencies and putting pressure on economies with large borrowing needs."
[September 28 gold ETF holdings: SPDR gold holdings decreased by 0.29 tons]
According to the data of gold ETFs on September 29, the world's largest gold ETF-SPDR Gold Trust held 990.03 tons of gold as of September 28, a decrease of 0.29 tons from the previous trading day.
[US September consumer confidence index unexpectedly dropped to a seven-month low]
US consumer confidence fell for the third consecutive month in September, affected by concerns about delta strains and rising prices.
According to a report from the World Large Business Research Council on Tuesday , the consumer confidence index fell to 109.3 in September from 115.2 revised in August. Economists surveyed previously expected 115.0 .
These data show that the spread of the delta strain continues to weaken consumer expectations for the economy, affecting spending on the service industry. Although the number of new cases has fallen from the recent peak, they are still rising in some states. At the same time, Americans paid higher prices for household goods, and consumer sentiment was further suppressed.
Lynn Franco, senior director of economic indicators of the World Large-scale Enterprise Research Association, said that the reason for the decline in consumer confidence in September was that the spread of the delta strain curbed people's optimism.
She said: "Worries about economic conditions and short-term growth prospects have deepened, and the willingness to spend on homes, cars and major home appliances has fallen again."
After the release of the data report, the U.S. stock market continued its downward trend, the 10-year U.S. Treasury yield rose and the U.S. dollar strengthened.
[The S&P 500 index hit its biggest daily decline since May due to the sharp rise in U.S. bond yields and inflation concerns]
U.S. stocks closed sharply lower on Tuesday, and the market was generally sold off, affected by rising U.S. Treasury yields, rising concerns about inflation, and serious divergence in Washington's debt ceiling negotiations.
The three major US stock indexes fell nearly 2% or more. Interest rate-sensitive technology stocks and technology-related stocks fell the most, as investors lost their appetite for risk.
The S&P 500 index fell 2.04%, recording the largest single-day percentage drop since May, and the Nasdaq index fell 2.83%, recording the largest single-day percentage drop since March. Both are expected to record their biggest monthly decline since September 2020.
(S&P 500 daily chart)
Ryan Detrick, senior market strategist at LPL Financial, said, “The overall situation is that the yields of Treasury bonds have soared in the past week, leading to a mentality of'sell first, ask later'. (But) today there are multiple factors that affect market sentiment. Washington’s debt ceiling and spending The motion and possible tax increases have been repeated over and over again, putting pressure on the overall psychology of investors and leading to a considerable sell-off."
[Powell said that the economy is still far away from achieving full employment]
Fed Chairman Powell said on Tuesday that the U.S. economy is still far from achieving full employment, and full employment is a key component of the Fed’s threshold for raising interest rates.
Powell testified before the U.S. Senate Finance Committee: "What I said last week is that we have almost passed the test of the debt reduction plan. I made it clear that, in my opinion, we are still a long way from reaching the threshold of full employment. The way to go."
Fed officials said they will continue to buy $120 billion in bonds each month until the Fed has made “further substantial progress” in achieving full employment and inflation targets, but they have set a higher threshold for raising interest rates.
In general, the gold price bears are still strong, and the market outlook may continue to fall, which may challenge the important support level of 1700, and the bulls temporarily leave the market to wait and see.
(Spot gold daily chart)
GMT+8 8:46, spot gold was quoted at $1734.91 per ounce.
Continue to pay attention to the speeches of many officials of the Federal Reserve, including Chairman Powell, who will also make an appearance. In addition, the election of the Japanese prime minister is also worthy of attention.
Fundamentals are bad
[Usage of the Fed's overnight reverse repurchase program reached a record high of US$1.365 trillion]
The use of the Fed's overnight reverse repurchase program reached a record high, and investors dumped Treasury bills that may face default because Congress did not raise or suspend the debt ceiling in time.
New York Federal Reserve data showed that 83 participants in the reverse repurchase market overnight used a total of US$1.365 trillion on Tuesday, exceeding the record high of US$1.352 trillion set on September 23.
After U.S. Treasury Secretary Yellen warned that the government might run out of cash by October 18, Treasury bills that expired in mid-October were sold off, and market demand for the Fed’s overnight reverse repurchase tool soared.
TD Securities strategist Gennadiy Goldberg said, "There is nowhere else for cash in the market. We can now include Treasury bills related to the expiration of the debt ceiling into the avoidance list."
The yield of Treasury bills due on October 19 rose to 0.075%. Investors avoid Treasury bills that expire in late October and early November because they are considered to be delayed in redemption.
Jefferies economist Thomas Simons said: "This is the first time they have given us specific time."
Before Yellen released the latest forecast, it was difficult for the Treasury Department and Wall Street strategists to predict the so-called "X-day", that is, the day when the government defaults if the debt ceiling is not complied with. The Bipartisan Policy Center stated in a new analysis on September 24 that the final date for members of Congress to raise or suspend the debt ceiling will be between October 15 and November 4.
George Goncalves, head of US macro strategy at MUFG Securities, said that the longer Congress drags on raising or suspending the debt ceiling, the more risks will begin to rise sharply .
[St. Louis Federal Reserve Bank Chairman: The Fed should shrink its balance sheet in 2022]
St. Louis Federal Reserve Chairman Brad said that the Fed should begin to reduce its balance sheet of about 8 trillion US dollars as soon as it ends its bond purchase plan next year , reminding the Fed that it may need more aggressive measures to cope with high inflation, including raising interest rates twice next year.
Brad said in an interview that he currently expects the inflation rate to remain at 2.8% until next year, well above the Fed’s 2% target and the highest among Fed officials’ latest economic forecasts released last week.
Although Brad stated that he agrees that inflation will ease on its own to a certain extent, he said that the central bank needs to make more efforts to ensure its smooth progress without the need to adopt restrictive policies that may jeopardize the current expansion.
Inflation "will remain above the target during the forecast period." This is a good thing. We are realizing our...framework," Brad said of the Fed’s forecast last week. The Fed expects that even if interest rates remain below what is considered restrictive, inflation will remain above 2% until 2024. .
The Fed’s new framework seeks to allow inflation to rise above the target for a period of time to offset the low inflation of the past 10 years. Nevertheless, this year's inflation jump has surprised officials. It seems that inflation may last longer than initially expected.
"The risk now is that inflation will rise above the target too much and last too long... How high do we want inflation to be?... This is the key issue for (the Federal Open Market Committee) next year."
[Chairman of the Atlanta Fed: The US job market is in a state of "chaos", but the economy is still on track to fully recover]
Atlanta Fed President Bostic said on Tuesday that the U.S. labor market is in a state of "chaos," and workers are addressing child care issues and responding to the spreading epidemic, but the United States is still on track to fully recover.
"There are a lot of adjustments, a lot of chaos and turmoil." When people return to work, they have to deal with family responsibilities, companies turn to automation during labor shortages, and the new crown crisis continues. Bostic's mid-sized bank in the United States The alliance said in a speech, "But in the final analysis, the economic development trajectory is stable. My model and the data I see show that we are steadily moving towards a full recovery. Even with the increase in DELTA cases, the growth momentum will continue. Strong. "
[The U.S. dollar rose to a 10-and-a-half-month high, boosted by the sharp rise in U.S. bond yields]
The U.S. dollar surged to a high in more than 10 months on Tuesday, following the upward trend in U.S. Treasury yields, as investors expected the Fed to announce in November that it would start to reduce the pace of asset purchases and may raise interest rates thereafter.
(Daily chart of the US dollar index)
The Fed's hawkish stance at the monetary policy meeting last week strengthened the market's view that the Fed would start to cut back on bond purchases earlier than expected, which accelerated the rise in yields.
Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said: "As inflation expectations have suppressed the relative attractiveness of public debt, yields have generally risen, but U.S. bond yields have risen faster because traders are betting on the actions of the Federal Reserve. Will be faster than other central banks in the world."
"Interest spreads are tilting towards the U.S. dollar, driving down low-yielding currencies and putting pressure on economies with large borrowing needs."
[September 28 gold ETF holdings: SPDR gold holdings decreased by 0.29 tons]
According to the data of gold ETFs on September 29, the world's largest gold ETF-SPDR Gold Trust held 990.03 tons of gold as of September 28, a decrease of 0.29 tons from the previous trading day.
Fundamentals are bullish
[US September consumer confidence index unexpectedly dropped to a seven-month low]
US consumer confidence fell for the third consecutive month in September, affected by concerns about delta strains and rising prices.
According to a report from the World Large Business Research Council on Tuesday , the consumer confidence index fell to 109.3 in September from 115.2 revised in August. Economists surveyed previously expected 115.0 .
These data show that the spread of the delta strain continues to weaken consumer expectations for the economy, affecting spending on the service industry. Although the number of new cases has fallen from the recent peak, they are still rising in some states. At the same time, Americans paid higher prices for household goods, and consumer sentiment was further suppressed.
Lynn Franco, senior director of economic indicators of the World Large-scale Enterprise Research Association, said that the reason for the decline in consumer confidence in September was that the spread of the delta strain curbed people's optimism.
She said: "Worries about economic conditions and short-term growth prospects have deepened, and the willingness to spend on homes, cars and major home appliances has fallen again."
After the release of the data report, the U.S. stock market continued its downward trend, the 10-year U.S. Treasury yield rose and the U.S. dollar strengthened.
[The S&P 500 index hit its biggest daily decline since May due to the sharp rise in U.S. bond yields and inflation concerns]
U.S. stocks closed sharply lower on Tuesday, and the market was generally sold off, affected by rising U.S. Treasury yields, rising concerns about inflation, and serious divergence in Washington's debt ceiling negotiations.
The three major US stock indexes fell nearly 2% or more. Interest rate-sensitive technology stocks and technology-related stocks fell the most, as investors lost their appetite for risk.
The S&P 500 index fell 2.04%, recording the largest single-day percentage drop since May, and the Nasdaq index fell 2.83%, recording the largest single-day percentage drop since March. Both are expected to record their biggest monthly decline since September 2020.
(S&P 500 daily chart)
Ryan Detrick, senior market strategist at LPL Financial, said, “The overall situation is that the yields of Treasury bonds have soared in the past week, leading to a mentality of'sell first, ask later'. (But) today there are multiple factors that affect market sentiment. Washington’s debt ceiling and spending The motion and possible tax increases have been repeated over and over again, putting pressure on the overall psychology of investors and leading to a considerable sell-off."
[Powell said that the economy is still far away from achieving full employment]
Fed Chairman Powell said on Tuesday that the U.S. economy is still far from achieving full employment, and full employment is a key component of the Fed’s threshold for raising interest rates.
Powell testified before the U.S. Senate Finance Committee: "What I said last week is that we have almost passed the test of the debt reduction plan. I made it clear that, in my opinion, we are still a long way from reaching the threshold of full employment. The way to go."
Fed officials said they will continue to buy $120 billion in bonds each month until the Fed has made “further substantial progress” in achieving full employment and inflation targets, but they have set a higher threshold for raising interest rates.
In general, the gold price bears are still strong, and the market outlook may continue to fall, which may challenge the important support level of 1700, and the bulls temporarily leave the market to wait and see.
(Spot gold daily chart)
GMT+8 8:46, spot gold was quoted at $1734.91 per ounce.
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