Financial Breakfast on December 14: Gold climbs to five-month high, US CPI data spurs Fed to slow rate hike bets
On Wednesday (December 14), Beijing time, the dollar traded around 104.04; Expectations of slowing the pace of interest rate hikes; gold prices rose more than 1%, reaching their highest point in more than five months to $1,824.39 an ounce; oil prices closed above $80 a barrel and recorded the largest one-day gain in more than a month, as Investors bought into risky assets following U.S. data showed inflation slowed. The market was also buoyed by fears of supply disruptions, including the Canada-U.S. Keystone pipeline, which remains out of service following a massive spill last week.
Commodity closing situation: Brent crude futures settled at $80.68 a barrel, up 3.5%. U.S. crude futures settled at $75.39 a barrel, up 3%. Both contracts posted their biggest one-day gains since Nov. 4. U.S. gold futures settled at $1,825.50, up 1.9%.
Closing of US stocksThe Dow Jones index closed up 0.31% at 34110.69 points; the S&P 500 index closed up 0.72% at 4019.30 points; the Nasdaq composite index closed up 1.01% at 11256.81 points.
wednesday preview
precious metal
Gold rose more than 1% on Tuesday to its highest in more than five months following a smaller-than-expected rise in U.S. consumer prices fueled bets the Federal Reserve would slow rate hikes. Spot gold climbed 1.7 percent to $1,810.98 an ounce, having touched its highest since June 30 in early trade.
Gold prices rose sharply on the prospect of a possible slowdown in rate hikes, said Bob Haberkorn, senior market strategist at RJO Futures. The inflation data “suggests to the market that the rate hikes the Fed has been doing are working and that they may not need to be as aggressive in raising rates this week or in the coming months.”
U.S. consumer prices barely rose in November, posting the smallest year-over-year increase in nearly a year amid falling gasoline and used-car costs. The dollar fell more than 1 percent to a near six-month low following the data, making gold cheaper once morest holders of other currencies. Benchmark U.S. 10-year Treasury yields also slipped.
Fed funds futures prices are now implying that a smaller 25 basis point rate hike in February is more likely than ever before, following a 50 basis point hike expected this week.
“If the Fed abandons its hawkish tone entirely, gold might be on a path to the $1,861 level,” Edward Moya, senior analyst at OANDA, said in a note.
Spot silver rose 1.9% to $23.76 an ounce, platinum jumped 3.4% to $1,035.63 and palladium rose 2.4% to $1,931.76.
Crude oil prices settled above $80 a barrel on Tuesday, posting their biggest one-day gain in more than a month, as investors bought into risky assets following U.S. data showed a slowdown in inflation. The market was also buoyed by fears of supply disruptions, including the Canada-U.S. Keystone pipeline, which remains out of service following a massive leak last week.The U.S. dollar index fell sharply on Tuesday following data showed core U.S. consumer prices rose less than expected in November, reinforcing expectations that the Federal Reserve will slow the pace of rate hikes. “No one really thinks the number will be lower than expected, and it might be a demand-friendly event that makes the market buy,” said Mizuho Bank analyst Robert Yawger.
Focus will now turn to how the Fed reacts to the CPI report, Yawger added. A pause in rate hikes might push prices higher. However, traders said oil supply concerns had been present for several days, suggesting Tuesday’s rebound might be due to broader “risk-on” sentiment following the release of the inflation data.
TC Energy Corp’s Keystone pipeline, with a capacity of 620,000 barrels per day, remains out of service following a leak last week, which might reduce overall U.S. inventories, especially for delivery of the U.S. crude futures contract at Cushing, Oklahoma Center inventory; According to a Archyde.com survey, U.S. crude oil inventories were expected to have fallen by 3.6 million barrels last week.
foreign exchange
The dollar fell across the board on Tuesday following data showed that U.S. consumer price inflation was weaker than expected last month, reinforcing expectations that the Federal Reserve will slow the pace of interest rate hikes following a two-day meeting. The dollar fell to a six-month low once morest the euro following the data, with the euro at $1.0673, its highest since June, before gaining 0.9 percent at $1.0631 in late New York trade.
USD/JPY fell to a one-week low of 134.67, and was last at 135.55, down 1.5%. Data showed that U.S. consumer prices rose less than expected for the second straight month in November, recording the smallest month-on-month gain in nearly a year, as gasoline and health care and the cost of used cars and trucks fell. U.S. consumer prices climbed 7.1% in the 12 months through November, the smallest gain since December 2021, following rising 7.7% in October.
Excluding volatile food and energy prices, core CPI rose 0.2 percent in November following rising 0.3 percent in October. In the 12 months through November, the core CPI rose 6.0% following rising 6.3% in October.
The report bolstered consensus expectations that the rate hike would be narrowed to 50 basis points when the Fed announces its rate decision on Thursday. Fed funds futures are also pricing in lower expectations for terminal interest rates, the level at which the Fed will stop raising rates, now at 4.8%, expected to be reached in May. That was down from expectations of around 5.1% late last month.
Traders are also betting on the Fed raising interest rates by 25 basis points at each of its first two meetings in 2023 before stopping hikes, with a slight possibility that the last hike will be in May rather than March. “This means that the pace of rate hikes has slowed further, narrowing the spread between the dollar and other currencies further, because other countries are also raising rates, and the upward pressure on the dollar is reduced,” said Ivan Asensio, director of foreign exchange risk consulting at Silicon Valley Bank.
The dollar also fell sharply once morest commodity currencies; the Australian dollar rose 1.6% to $0.6850. The New Zealand dollar rose 1.3% to $0.6462. The U.S. dollar was down 0.5% once morest the Canadian dollar at C$1.3560. Richard Flax, chief investment officer at Moneyfarm in London, said: “We generally share the view that the market expects the Fed to move from raising interest rates so far to cutting interest rates in a relatively short period of time, and our view is that the market is pricing in Potential for the Fed to stay on top of its peak rate for a while longer.”
market news
Central U.S. hit by tornado, flights delayed, power outages, houses damaged
According to reports, destructive tornadoes are sweeping through the central United States, causing at least seven people to be injured and other buildings damaged in northern Texas. Hundreds of flights were delayed at Dallas-Fort Worth International Airport in the state. In addition, the tornado also caused power outages and damaged houses in many places in Oklahoma. From Texas to Mississippi, regarding 21 million people were threatened by severe storms, including tornadoes, the report said. (CCTV News)
India, UK restart FTA negotiations, both sides look forward to reaching agreement
Indian Minister of Commerce and Industry Piyush Goyal met with visiting British Secretary of State for International Trade Kemi Badnotchi. India’s official announcement stated that the ministers of the two countries discussed the ongoing free trade agreement during their meeting and reiterated their commitment to the negotiation of the free trade agreement. Both sides expressed confidence that the agreement will boost employment in both countries and unlock the full potential of investment and exports.
Russian Deputy Foreign Minister: Some Russian diplomats will be forced to leave the United States
Russian Deputy Foreign Minister Ryabkov said on the 13th local time that some Russian diplomats will be forced to leave the United States in early 2023, and Russia will respond to this, but not necessarily reciprocally. Ryabkov emphasized that Moscow has proposed dozens of times that measures should be taken to maintain the stability of diplomatic work, but the United States has turned the work of diplomats into a way of putting pressure on Russia. Russia has also proposed capping the number of diplomatic personnel of the two countries, but this proposal has also not received a response from the United States.
US scientists announce major breakthrough in nuclear fusion technology
On Tuesday, US researchers confirmed they had overcome a major hurdle — producing more energy from fusion experiments than was put in, reports reported. But experts say there is still some way to go before fusion power can be delivered to homes. The experiment was performed at the National Ignition Facility at Lawrence Livermore National Laboratory (LLNL) in California. Nuclear fusion has been called the “holy grail” of energy production. It works by combining pairs of light atoms — this “fusion” releases a lot of energy. Nuclear fusion produces much more energy than nuclear fission and produces only small amounts of short-term radioactive waste. Importantly, this process produces no greenhouse gas emissions and therefore does not contribute to climate change.
First EU-ASEAN Comprehensive Summit to be held in Belgium
The EU and ASEAN will hold their first comprehensive summit in Brussels, the capital of Belgium, on December 14, local time. The summit will be co-chaired by European Council President Michel and Cambodian Prime Minister Hun Sen, who will hold the rotating presidency of ASEAN in 2022. At this summit, the two sides will focus on exchanges on interconnection, clean energy transformation, trade, digital transformation and other aspects. (CCTV News)
Peng Sen, former deputy director of the National Development and Reform Commission: The pilot reform of the national factor market allocation reform is expected to be officially launched in the near future
Peng Sen, former deputy director of the National Development and Reform Commission, said that the focus of the economic system reform in the past two years is to promote the comprehensive reform of the market-oriented allocation of factors, accelerate the construction of a unified national market, improve the fair competition review system, and further improve the socialist market economic system. He also said that at the end of last year, the central government officially issued a notice to carry out a comprehensive pilot reform of the market-oriented allocation of factors across the country. This key reform involves the management system, transaction rules, property rights protection and distribution mechanism of land, labor, capital, technology, data and other factors. Wait. The plans of more than a dozen provinces across the country have initially passed the review, and the reform pilot work is expected to be officially launched in the near future. (Financial Association)
U.S. official: Russia will be invited to APEC meeting hosted by the U.S. next year
According to a Archyde.com report on the 12th, a US official said on Monday that Russia will be invited to participate in the Asia-Pacific Economic Cooperation (APEC) meeting hosted by the United States next year. As “APEC’s good steward,” the United States will invite one of the group’s 21 economies, Matt Murray, the top U.S. official in charge of APEC, told a news conference in Singapore Russia went to the United States to participate in the conference. Murray did not say whether Russian President Vladimir Putin himself would attend next year’s APEC leaders’ meeting in San Francisco, United States. Russian First Deputy Prime Minister Andrei Belousov represented Putin at last month’s APEC leaders’ meeting in Thailand.
Zelensky says Ukrainian energy sector needs regarding 800 million euros in emergency aid
According to news from Agence France-Presse on the 13th, Ukrainian President Zelensky participated in an international aid conference held in Paris online on Tuesday local time. At the meeting, he said that Ukraine’s energy sector needs emergency assistance totaling regarding 800 million euros. . “Of course, this is a very high number, but the cost (of doing this) is lower than the cost of a possible outage,” Zelensky told the participants. “I hope (you) decide accordingly.”
