2023-04-28 22:23:18
Financial Breakfast on April 29: U.S. banking turmoil worries reappear, gold ushers in second month of monthly gains
On Saturday (April 29), Beijing time, the dollar rose on Friday following data showed that U.S. inflation rose in March, though at a slower pace, keeping the Fed firmly on track to raise interest rates next week; gold rebounded , as falling yields and renewed concerns regarding turmoil in the U.S. banking sector gave the safe asset its second monthly gain even as steady U.S. inflation strengthened bets for a rate hike next week.
Commodity closing situation:U.S. gold futures settled flat at $1,999.10. June Brent crude futures rose 1.5% to settle at $79.54 a barrel, while the more actively traded July contract jumped 2.7% to settle at $80.33. U.S. crude futures rose 2.7 percent to close at $76.78.
U.S. stocks closed:The Dow Jones Industrial Average rose 0.8% to 34,098.16, the S&P 500 .SPX rose 0.83% to 4,169.48 and the Nasdaq rose 0.69% to 12,226.58.
precious metal
Gold rallied on Friday as falling yields and renewed worries regarding turmoil in the U.S. banking sector gave the safe asset its second monthly gain even as steady U.S. inflation strengthened bets for a rate hike next week .
The Fed delivered a detailed and scathing review of its failure to spot problems and push for a fix before the Silicon Valley bank collapsed, promising stronger oversight and tougher rules.
The Fed’s report coincided with a drop in 10-year yields, turning gold higher, “but it all depends on what (Fed Chairman Powell) says next week,” said Daniel Pavilonis, senior market strategist at RJO Futures, an indicator of 10 Yields on U.S. Treasury notes fell following data showed the pace of headline inflation slowed in March and consumer spending held steady. But the data also suggested that core inflationary pressures remained strong, prompting traders to increase bets on a rate hike next week.
Gold climbed to a one-year peak of $2,048.71 in mid-April as the banking crisis unfolded.
Silver was steady at $24.95 an ounce, platinum was flat at $1,077.04 and palladium rose 0.1 percent to $1,496.47, all on track for a second straight monthly gain.
Oil prices mostly rose more than 2% on Friday following strong earnings from energy companies, with U.S. data showing crude output falling while fuel demand rose.But both Brent and WTI futures fell for a second week in a row, with Brent posting a fourth straight monthly decline, as disappointing U.S. economic data and uncertainty over interest rates weighed on the outlook for demand.
“Markets have been down for much of the week on fears of a looming recession and the widening of the First Republic crisis, however, today’s news that problems at First Republic may There are solutions and there are data showing oil demand is up and production is down,” Flynn said.
U.S. officials are coordinating emergency talks to rescue First Republic Bank following private discussions led by advisers to the bank have yet to reach a deal, according to three sources familiar with the situation.
U.S. crude oil production fell to 12.483 million bpd in February, the lowest since December 2022, data from the U.S. Energy Information Administration (EIA) showed on Friday. U.S. crude and product supplies, which signal demand, rose to 19.997 million bpd, the highest since November 2022.
Crude oil prices have declined in recent weeks and months amid concerns that higher interest rates might reduce demand.
Brent crude is down regarding 3% this week following falling regarding 5% last week, while U.S. crude futures are down regarding 1% for the week following falling regarding 6% last week.
For the month, Brent has slipped less than 1 percent, while U.S. crude has gained regarding 1 percent. It was the first monthly rise in U.S. crude oil prices in six months.
U.S. consumer spending was flat in March as a rise in spending on services was offset by a drop in spending on goods, but core inflationary pressures remained strong and the Federal Reserve is expected to raise interest rates once more next week.
foreign exchange
The dollar rose on Friday following data showed that U.S. inflation rose in March, albeit at a slower pace, keeping the Federal Reserve firmly on track to raise interest rates next week.
The yen, meanwhile, fell across the board following the Bank of Japan, as expected, said it would keep interest rates ultra-low and unanimously decided not to make changes to its yield curve control (YCC) policy.
The yen slumped to its weakest once morest the euro since September 2008 and its weakest once morest the dollar in seven weeks. EUR/JPY was last up 1.5% at 150. For the week, the euro rose 1.8 percent once morest the yen.
USD/JPY, on the other hand, was last up 1.7% at 136.235, putting it up 1.6% for the week, its best week since late February.
The U.S. dollar index , which measures the greenback’s value once morest six major currencies, rose 0.2% to 101.65.
Data on Friday showed that the personal consumption expenditures (PCE) price index rose 0.1% in March following rising 0.3% in February. In the 12 months through March, the PCE price index rose 4.2 percent following climbing 5.1 percent in February.
Excluding the volatile food and energy components, core PCE prices rose 0.3%, the same pace as in February. The so-called core PCE price index rose 4.7% in March from a year earlier. 4.6%. The Fed tracks the PCE price index to achieve its 2 percent inflation target.
“You’d probably need a bigger slowdown to reassure the Fed that it’s successfully done its job; not yet, that hasn’t changed (policymakers are down Weekly) outlook.” After the inflation data, the interest rate futures market had priced in a 90 percent chance of a 25 basis point hike next week.
The dollar extended gains following another report on Friday showed that the University of Michigan’s consumer sentiment index came in at 63.5 in April, up from a three-month low of 62 in March. U.S. consumers’ one-year inflation expectations rose to 4.6 percent this month from 3.6 percent in March, further supporting rate hike expectations and also boosting the dollar. Meanwhile, the euro slipped 0.1% to $1.1017.
Economic data showed mixed growth and inflation across the euro zone, adding to uncertainty over the size of the ECB’s expected rate hike next week. Preliminary data showed that euro zone gross domestic product rose 0.1 percent in the first quarter, below the 0.2 percent forecast in a Archyde.com poll.
The euro fell more in early trade but pared losses as investors sold the yen once morest the euro. This also spilled over into the EUR/USD crosses. “We think the balance of odds is gradually shifting in favor of the dollar, a ‘Goldilocks’ mechanism for stronger activity data outside the U.S.,” Jonathan Petersen, senior market economist at Capital Economics, wrote in a research note. Appears to be fading, and we expect the greenback to benefit from safe-haven demand once the global growth picture begins to deteriorate more sharply in the coming months.”
market news
Bank of Italy: Risks to Italy’s financial stability have increased
On the 28th local time, the Bank of Italy issued a report stating that the overall condition of the Italian banking system is good. However, like other countries in the euro area, risks to Italy’s financial stability have also increased due to continued geopolitical instability, rising energy prices, inflationary pressures and deteriorating economic growth prospects. The report said that the asset quality of the Italian banking system showed no signs of deterioration, and that interest rate hikes had improved profitability. Benefiting from the economic recovery in 2021 and the first nine months of 2022, Italy’s public finances have improved. But the financial situation of Italian companies has been negatively impacted by slowing economic activity, higher prices for energy products and higher interest rates. The disposable income of Italian households may deteriorate in the second half of this year due to the continuation of high inflation.
Polish PM says will reach deal with EU on Ukrainian agricultural products
On April 28 local time, Polish Prime Minister Morawiecki said that Poland and the European Commission will reach an agreement on Ukrainian agricultural products in the near future. The European Commission is currently proposing to provide financial subsidies to farmers in the above five countries, and to agree to the import ban imposed by these countries on certain agricultural products from Ukraine. At the same time, it requires the five countries to open transit channels for Ukrainian agricultural products.
Passenger traffic at Shanghai’s two major airports is expected to reach 1.46 million during the “May 1st” holiday
According to the Shanghai Airport Group, during the “May 1st” small long holiday in 2023 (April 29-May 3), it is estimated that Pudong and Hongqiao will have 8,844 flights and 1.46 million passengers. Among them, the average daily flight volume 1,768 sorties (988 per day at Pudong Airport and 780 per day at Hongqiao Airport), with an average daily passenger flow of 293,000 (149,000 at Pudong Airport and 144,000 at Hongqiao Airport)
Russian central bank head: Russia will ban the stock trading of defense companies in unfriendly countries
Russian Central Bank Governor Nabiullina said on the 28th that Russia will prohibit stock transactions related to defense companies of unfriendly countries, and related stocks will be delisted. However, Nabiullina did not specify which stocks will be targeted and when the delisting process will start, but she emphasized that the withdrawal of relevant securities holders will be resolved.
Russia plans to cut $377m a month in refining subsidies
Russian Finance Minister Siluanov said that the Russian Finance Ministry plans to halve subsidies to refiners from July 2023. Payments to refineries from the budget will be cut by 30 billion rubles ($377 million) a month. The savings will reduce Russia’s budget gap. Known as a “damping mechanism”, the subsidies were introduced in 2019 to prevent over-exports of fuel and ensure sufficient stocks are available to meet domestic demand.
Italy’s House of Representatives approves government budget increase
On the 28th local time, the Italian House of Representatives approved the budget increase proposal proposed by the Italian government with 221 votes in favor and 116 votes once morest. The previous day, the bill was defeated by the House of Representatives because it did not receive an absolute majority of 201 votes. In addition, the House of Representatives passed the “Economic Planning Document” proposed by the government with 221 votes in favor and 115 votes once morest. The Economic Planning Document is Italy’s main economic planning tool, containing the country’s medium-term economic strategy and budgetary framework
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