Gold prices were little changed on Tuesday ahead of the U.S. Federal Reserve’s meeting, while palladium prices hit a new record high on persistent supply worries.
· Spot gold was flat at $1,780.90 per ounce. U.S. gold futures were little changed at $1,778.8 per ounce.
· While no major policy changes are expected from the Fed’s two-day policy meeting ending on Wednesday, investors will pay close attention to Chairman Jerome Powell’s outlook on the economy.
· Markets will also be watching the release of U.S. quarterly gross domestic product data this week.
· “Gold is sort of treading water ahead of the Fed meeting,” StoneX analyst Rhona O’Connell said. “The mantra of lower for longer in terms of U.S. interest rates is pretty unshakeable. So that would be essentially be supportive for gold. It wouldn’t necessarily be outright bullish because that’s what the markets expecting.”
“In the short term, gold’s major headwind would be renewed increases in the longer-term yields, notable the 10-year rate on the back of fresh strength in U.S. economic numbers,” analyst O’Connell added.
· The dollar edged up, making gold less alluring for other currency holders.
· Meanwhile, palladium rose 1% to $2,952 per ounce, after hitting a record high of $2,960.50.
· “We expect supply, demand deficits to widen sharply in 2021 to levels not seen since 2014, and narrow in 2022 but remain wide. This should raise pressure on limited above-ground stocks and aid prices,” HSBC analysts said in a note.
· Silver was mostly firm at $26.22 per ounce.
· Platinum was down 0.1% at $1,242.29.
· U.S. consumer confidence soars to 14-month high; house prices accelerate
U.S. consumer confidence jumped to a 14-month high in April as increased vaccinations against COVID-19 and additional fiscal stimulus allowed for more services businesses to reopen, boosting demand and hiring by companies.
The Conference Board said on Tuesday its consumer confidence index raced to a reading of 121.7 this month. That was the highest level since February 2020, just before the onset of the COVID-19 pandemic, and followed a reading of 109.0 in March. Economists polled by Reuters had forecast the index increasing to a reading of 113.0 in April.
· The Fed will stay put in 2021 despite growing concerns about overheating economy, CNBC survey shows
The Federal Reserve will remain on hold for the rest of this year despite an increasing belief among respondents to the CNBC Fed Survey that it should throttle back the stimulus it’s providing to the US economy.
Respondents forecast the Fed won’t reduce it’s $120 billion of asset purchases until January 2022, three months later than the March survey. And the first rate hike won’t come until December of next year.
· If Fed Chair Jerome Powell sounds ‘too optimistic’ this week, he’ll rattle Wall Street, Morgan Stanley warns
Morgan Stanley’s Matthew Hornbach sees a chance the Federal Reserve’s two day meeting this week will rattle investors.
“The biggest wild card is that the chairman sounds too optimistic based on the data that we’ve had so far,” he told CNBC’s “Trading Nation” on Monday. “The outlook is definitely bright.”
If Powell places too much emphasis on economic strength, it will spark concerns that the Fed will pare down its easy money policies sooner than expected, Hornbach warns.
“The markets may end up reading too much into his optimism and not enough into the need for patience to see more data come through,” he said.
His base case is Powell will successfully ease Wall Street fears over inflation and potentially higher interest rates.
“The 10-year Treasury yield is likely to remain rangebound for the time being. Our year-end forecast is at 1.7%,” Hornbach said. “The expected total return in Treasurys actually looks pretty good at this point. So, we expect money to come in and keep the market stable for the next several months.”
· Jerome Powell is a heavy favorite on Wall Street to be renominated as Fed chair
Federal Reserve Chairman Jerome Powell is a heavy favorite on Wall Street to be renominated for a second term by President Joe Biden even while there are substantial disagreements with the some aspects of Fed policy.
The CNBC Fed Survey for April finds 76% of respondents believe President Joe Biden will choose Powell again. Nominated to be chair by President Donald Trump, Powell began his first four-year term in 2018. It ends in early 2022 and presidents have typically unveiled their choices in the summer or fall before the chair’s term expires.
And, asked if climate change risk is an appropriate measure to guide the Fed in supervising financial institutions, 64% said it was not, while 36% said it was. Powell and other Fed members have increasingly talked about climate change and suggested it’s important for financial institutions to take account of the risk in their lending portfolios.
· House bill would make the $3,000 child tax credit permanent
Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee and gatekeeper of new tax legislation, issued a bill that would codify changes made by the recent $1.9 trillion American Rescue Plan.
· Bipartisan lawmakers readying alternative to Biden infrastructure plan
A bipartisan group of lawmakers in the U.S. Congress are working on an alternative to President Joe Biden’s $2.3 trillion infrastructure plan that would cost roughly half as much but spend far more on roads and bridges, a Republican senator said on Tuesday.
· After somber tone in first 100 days, Biden plans to try to sell spending to U.S. public
· Biden raising minimum wage for federal contractors to $15/hr
President Joe Biden will press his case for a national $15 minimum wage with an executive order on Tuesday raising pay to at least that level for hundreds of thousands of federal contract workers, senior White House officials said.
This would increase their existing minimum wage of $10.95 by nearly 37% by March 2022 with future increases still tied to inflation.
· Biden eyes $80 bln IRS boost to help fund family programs -NY Times
President Joe Biden will seek an extra $80 billion to fund U.S. tax collections that would help pay for his plan to bolster childcare, universal prekindergarten education and paid leave for workers, the New York Times reported on Tuesday.
The Democratic president's proposal to boost the Internal Revenue Service's budget over 10 years would help the agency curb tax evasion through audits of high earners and large corporations and include new disclosure requirements, the Times said, citing two people familiar with the plan.
Representatives for the White House and the U.S. Treasury Department, which oversees the IRS, had no immediate comment.
· Coronavirus Updates:
COVID-19 infections are still rising in 52 countries.
Global Cases: 149.31M (+824,998)
Global Deaths: 3.14M (+14,693)
No. 1 - 3
U.S. Cases: 32.92M (+51,331)
U.S. Deaths: 587,373 (+874)
India Cases: 17.98M (+362,902)
India Deaths: 201,165 (+3,285)
Brazil Cases: 14.44M (+76,085)
Brazil Deaths: 395,324 (+3,120)
No.104
Thailand Cases: 59,687 (+2,179)
Thailand Deaths: 163 (+15)
· Global Vaccination
So far, at least 179 countries have begun vaccinating people for the coronavirus and have administered at least 1,040,717,000 doses of the vaccine.
· U.S. CDC does not see link between heart inflammation and COVID shots
The U.S. Centers for Disease Control and Prevention has not seen a link between heart inflammation and COVID-19 vaccines, CDC director Rochelle Walensky said on Tuesday.
"We have not seen a signal and we've actually looked intentionally for the signal in the over 200 million doses we've given," Walensky said in a press briefing.
· CDC says fully vaccinated people can exercise, hold small gatherings outdoors without masks
· Pfizer’s new at-home pill to treat Covid could be available by end of the year, CEO hopes
Pfizer’s experimental oral drug to treat Covid-19 at the first sign of illness could be available by the end of the year, CEO Albert Bourla told CNBC on Tuesday.
The company, which developed the first authorized Covid-19 vaccine in the U.S. with German drugmaker BioNTech, began in March an early stage clinical trial testing a new antiviral therapy for the disease. The drug is part of a class of medicines called protease inhibitors and works by inhibiting an enzyme that the virus needs to replicate in human cells.
· U.S. probing two new blood clot cases after J&J's COVID-19 vaccine
· Public demand for AstraZeneca vaccine falls in Britain after blood clot scares
· UK retailers warn of higher prices as costs rise
· India’s economy will likely contract this quarter as Covid cases soar, economists warn
India’s economy may shrink in the current quarter as Covid-19 cases surge, but the country could recover in the next one, according to two economists.
Sonal Varma, India chief economist at Nomura, said the country is “clearly going to see a sequential growth hit” in its first quarter. India’s fiscal year begins in April and ends in March the following year.
She predicts that gross domestic product will shrink around 1.5% in the current quarter, which ends in June. Varma added there is “downside risk” to this estimate.
Double-digit growth still possible
Nomura’s Varma said it’s important not to generalize the current quarter’s contraction as India’s growth outlook for the full year.
The bank has cut its growth estimates for the year by around 1 percentage point so far.
“There is a downside risk to this number given the extended lockdowns we are seeing across states, but we do still think it’s going to be a double-digit growth for India,” she said.
Rao of DBS echoed the sentiment.
“We might still be able to eke out a double-digit growth,” she said. DBS predicts that the economy will grow 10.5% for the full fiscal year ending in March 2022.
“I might have to bring it down by half a percent or 1% in the coming weeks, depending on how restrictive the restrictions are going to be,” she said.
· OPEC+ ministers meet amid concern about rising virus cases
The group, known as OPEC+, began a meeting of its joint ministerial monitoring committee (JMMC) a day head of schedule, an OPEC+ source told Reuters.
Before the meeting OPEC+ sources said it was not clear if OPEC+ would hold a full ministerial meeting on Wednesday as originally planned or postpone it to the end of May as output policies were already broadly agreed for the next three months.
· U.S., Israeli officials voice concern over advances in Iran’s nuclear program -White House
U.S. and Israeli officials meeting in Washington on Tuesday discussed their serious concerns about advancements in Iran’s nuclear program and agreed on the “significant threat” posed by Iran’s behavior in the Middle East, the White House said.
Reference: CNBC, Reuters, Worldometers
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