Gold falls to over 2-month low on rising yields, dollar
· Gold extended its slide to a fifth session on Wednesday, dipping to its lowest in more than two months as bets for an economic recovery boosted the dollar and benchmark U.S. Treasury yields.
· Spot gold was down 1.2% at $1,773.72 per ounce, having hit its lowest since Nov. 30 at $1,768.60 earlier.
· U.S. gold futures settled down 1.5% at $1,772.80.
· “The U.S. economy is expected to slowly recover,” said David Meger, director of metals trading at High Ridge Futures.
Optimism over gaining the upper hand over the coronavirus is being shown in a slightly firmer dollar and in the 10-year yields, which rose to their highest since February 2020, Meger added.
· Growing optimism for a $1.9 trillion U.S. stimulus plan and rising inflation expectations pushed up benchmark Treasury yields , which in turn lifted the dollar to a more than one-week peak. Breakeven inflation , a measure of expected inflation, is at its highest since August 2014 at 2.2%.
· While gold is considered an inflation hedge likely spurred by widespread stimulus, higher yields have challenged that status since they increase the opportunity cost of holding non-yielding gold. But gold could come back into favour once other currencies start to outperform the dollar later this year, said OANDA analyst Craig Erlam.
· U.S. Federal Reserve officials last month debated how to lay the groundwork for the public to accept higher inflation, and also the need to “stay vigilant” for signs of stress in buoyant asset markets, according to minutes of the U.S. central bank’s Jan. 26-27 policy meeting. Auto-catalyst platinum fell 1.1% to $1,247.85 an ounce, well below Tuesday’s high of $1,336.50, a peak since September 2014.
· Palladium declined 0.4% to $2,372.62, while silver edged 0.1% higher to $27.26.
· Bitcoin smashes through $52,000 to hit a new all-time high
The red-hot cryptocurrency rose to a record high of $52,340 at around 2:45 p.m. ET, according to data from Coin Metrics.
· Robinhood to allow customers to deposit, withdraw cryptocurrencies
· BlackRock’s Rick Rieder says the world’s largest asset manager has ‘started to dabble’ in bitcoin
BlackRock’s Rick Rieder told CNBC on Wednesday the world’s largest asset manager has begun entering the bitcoin space.
The remarks from Rieder, who is BlackRock’s chief investment officer of global fixed income, came on the same day bitcoin broke above $51,000 for the first time.
· Crypto wallet Blockchain.com raises $120 million in latest funding round
· Additional fiscal stimulus powers U.S. retail sales; manufacturing output strong
U.S. retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-19 infections late last year.
Retail sales surged by a seasonally adjusted 5.3% last month after decreasing 1.0% in December. Economists polled by Reuters had forecast sales increasing 1.1% in January.
Retail sales increased 7.4% from a year ago. Sales last month were led by motor vehicles, with receipts at auto dealerships accelerating 3.1%. Sales at clothing stores soared 5.0%. Consumers also stepped up spending at restaurants and bars, boosting receipts 6.9%. Still, sales at restaurants and bars were down 16.6% compared to January 2020.
· U.S. producer prices post biggest gain since 2009
U.S. producer prices increased by the most since 2009 in January as the cost of goods and services surged, suggesting inflation at the factory gate was starting to creep up.
The producer price index for final demand jumped 1.3% last month, the biggest gain since December 2009 when the government revamped the series, the Labor Department said on Wednesday. That followed a 0.3% rise in December. In the 12 months through January, the PPI accelerated 1.7% after rising 0.8% in December.
A 1.3% rise in the prices of services accounted for two-thirds of the increase in the PPI. That was the biggest gain since December 2009 and followed a 0.1% drop in December.
The cost of goods surged 1.4% after gaining 1.0% in December. Economists polled by Reuters had forecast the PPI would rise 0.4% in January and gain 0.9% on a year-on-year basis.
· U.S. business inventories rise solidly in December
U.S. business inventories increased solidly in December, with stocks at retailers larger than initially estimated.
Business inventories rose 0.6% in December after gaining 0.5% in November, the Commerce Department said on Wednesday. Inventories are a key component of gross domestic product.
· Fed officials see economy ‘far from’ where it needs to be, meaning easy policy won’t change soon, minutes show
Federal Open Market Committee members at their most recent gathering reaffirmed that the central bank will be keeping policy loose well into the future, according to meeting minutes released Wednesday.
With the economy continuing to shake off the effects from the Covid-19 pandemic, the committee, which sets monetary policy for the Federal Reserve, kept policy unchanged.
That meant holding benchmark short-term borrowing rates near zero and maintaining the minimum $120 billion of asset purchases each month.
In a discussion over the Fed’s asset purchase program and interest rate policy, the minutes indicated little chance for a change anytime soon.
“Participants noted that economic conditions were currently far from the Committee’s longer-run goals and that the stance for policy would need to remain accommodative until those goals were achieved,” the meeting summary said. “Consequently, all participants supported maintaining the Committee’s current settings and outcome-based guidance for the federal funds rate and the pace of asset purchases.”
· Fed minutes highlight intention to keep rates low: Stifel chief economist
Lindsey Piegza, Stifel chief economist, and Larry Adam, Raymond James CIO, join ‘Power Lunch’ to discuss the recent Fed minutes and what it says about the Fed’s outlook as the coronavirus pandemic continues.
· Inflation not likely to hit Fed's target through 2022, Rosengren says
Inflation is unlikely to hit the Federal Reserve’s 2% target on a sustained basis at least through 2022, Boston Fed President Eric Rosengren said on Wednesday, adding that he was not concerned about an immediate jump in prices that is expected to occur as the coronavirus pandemic eases.
· Fed's Barkin is 'quite optimistic' on U.S. outlook
Federal Reserve Bank of Richmond President Thomas Barkin on Wednesday said he sees three phases for the U.S. economy this year and overall he is “quite optimistic” thanks to gains health officials appear to be making in bringing the COVID-19 pandemic under control.
The first third of the year will be the most challenging, with a continuing need for measures to support unemployed workers and small businesses while vaccination efforts gain traction, he told a virtual event hosted by the Maryland Chamber of Commerce.
The second phase around mid-year will see vaccinated populations reengaging in activities that they have had to forego for much of the last year, adding he sees a fair bit of “pent up demand” for pursuits including travel and entertainment.
Lastly, the final third of the year should see a return to a more normal business environment, Barkin said. Nonetheless, the most important plank to achieving his outlook is success on the public health front, he said.
· CORONAVIRUS UPDATES:
Global Cases: 110.40 (+380,170)
Global Deaths: 2.43M (+10,672)
No. 1
U.S. Cases: 28.44M (+67,750)
U.S. Deaths: 502,129(+2,122)
No. 37
Japan Cases: 419,015 (+1,250)
Japan Deaths: 7,102 (+87)
No.86
South Korea Cases: 84,946 (+621)
South Korea Deaths: 1,538 (+4)
No.114
Thailand Cases: 24,961 (+175)
Thailand Deaths: 82
· Exclusive: Pfizer COVID-19 vaccine supply to the EU about 10 million doses short of plan -sources
· Mexico urges rich countries to stop 'hoarding' COVID-19 vaccines
· Erdogan says Turkey to start gradual COVID-19 normalisation in March
· Switzerland plans cautious easing of pandemic lockdown from March
· COVID response drives $24 trillion surge in global debt: IIF
The COVID pandemic has added $24 trillion to the global debt mountain over the last year a new study has shown, leaving it at a record $281 trillion and the worldwide debt-to-GDP ratio at over 355%.
· China’s digital yuan needs to beat Alipay, WeChat Pay before challenging dollar, researcher says
China’s digital yuan will need to dethrone the country’s domestic e-payments giants first, before it can think of competing against the greenback internationally, says the Peterson Institute for International Economics’ Martin Chorzempa.
· China's retail, catering sales jump in Lunar New Year staycation
· U.S. says threat posed by North Korea cyber activity part of policy review
· Italy's new PM Draghi promises sweeping reforms, urges national unity
Prime Minister Mario Draghi called on Italians on Wednesday to pull together to help rebuild the country following the coronavirus pandemic and promised his new government would introduce sweeping reforms to revitalise the battered economy.
· Israel PM Netanyahu says he had an hourlong phone call with Biden
White House press secretary Jen Psaki said Tuesday that Netanyahu would be the first Middle East leader Biden would speak with as president.
The call signals that the new U.S. administration aims to maintain the close ties to Israel that were strengthened during Donald Trump’s presidency.
The White House did not immediately provide a readout of Biden’s call with the prime minister.
· Biden administration warns of consequences for deadly Iraq attack
The Biden administration vowed on Wednesday that there will be consequences for those behind the deadly rocket attack earlier this week in northern Iraq.
· Biden’s snub of Saudi Crown Prince Mohammed bin Salman is a ‘warning’ signaling a relationship downgrade
· Iran plans extra advanced machines at underground enrichment plant: IAEA
· Merkel tells Rouhani Iran should return to nuclear deal
· Myanmar coup protesters mass to reject army claim of support
Reference: Reuters, CNBC, Worldometes
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