Firm dollar weighs on gold amid global growth risks

Spot gold was down 0.1 percent at $1,237.51 per ounce, as of 0401 GMT, after having hit its lowest since Dec. 4 at $1,232.39 on Friday. Gold has not recovered yet from Friday’s decline, said analyst Helen Lau of Argonaut Securities, adding that prices were moving on the strong dollar over the weekend. The dollar index, which measures the greenback against other major currencies, was just below the 19-month high of 97.71 hit on Friday. Lower interest rates reduce the opportunity cost of holding n


Spot gold was down 0.1 percent at $1,237.51 per ounce, as of 0401 GMT, after having hit its lowest since Dec. 4 at $1,232.39 on Friday. Gold has not recovered yet from Friday’s decline, said analyst Helen Lau of Argonaut Securities, adding that prices were moving on the strong dollar over the weekend. The dollar index, which measures the greenback against other major currencies, was just below the 19-month high of 97.71 hit on Friday. Lower interest rates reduce the opportunity cost of holding n
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Company: cnbc, Activity: cnbc, Date: 2018-12-17  Authors: simon dawson, bloomberg, getty images
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Firm dollar weighs on gold amid global growth risks

Gold prices inched lower on Monday, as the dollar held firm below a 19-month peak on safe-haven demand amid concerns of a global economic slowdown, and as investors awaited cues on U.S. interest rate hikes from a Federal Reserve meeting later this week.

Spot gold was down 0.1 percent at $1,237.51 per ounce, as of 0401 GMT, after having hit its lowest since Dec. 4 at $1,232.39 on Friday.

U.S. gold futures were little changed at $1,241.3 per ounce.

Gold has not recovered yet from Friday’s decline, said analyst Helen Lau of Argonaut Securities, adding that prices were moving on the strong dollar over the weekend.

Weaker-than-expected economic data out of China and Europe and fears of a possible U.S. government shutdown enhanced appeal for the U.S. currency, which has played the role of a safe-haven asset in recent times.

The dollar index, which measures the greenback against other major currencies, was just below the 19-month high of 97.71 hit on Friday.

Markets will closely watch the future trajectory of U.S. monetary policy at the Federal Reserve’s Dec. 18-19 meeting where the board is set to raise interest rates by 25 basis points.

“Markets will rally on the back of dollar weakness after the central bank signals a more dovish stance, but the advance will fall back quickly as global growth concerns reassert themselves,” INTL FCStone analyst Edward Meir said in a note.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

Spot gold is biased to break a support at $1,232 per ounce, and fall to a lower support zone of $1,224-$1,228, according to Reuters technical analyst Wang Tao.

Meanwhile, hedge funds and money managers switched to net long position in Comex gold in the week to Dec. 11, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

This was the first time gold speculators held a net long position since July, and the strongest since June.

“Uncertainties of the trade war are still weighing on the market,” said Dick Poon, general manager, Heraeus Metals Hong Kong Ltd.

“It is getting close to Christmas time, so it is getting super quiet in the market. Investors reduce their inventories as much as possible before the year ends.”

Among other precious metals, spot palladium gained to $1,238.20 per ounce.

Silver declined marginally to $14.56 per ounce, while platinum fell 0.6 percent to $782.50 per ounce.


Company: cnbc, Activity: cnbc, Date: 2018-12-17  Authors: simon dawson, bloomberg, getty images
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Dollar index near 19-month high on safe-haven bid amid global growth worries

Weaker-than-expected economic data from China and Europe and fears of a possible U.S. government shutdown spooked investors away from stocks toward the greenback and yen. The dollar index, which gauges its value versus six major peers, was little changed at 97.44, below the 19-month high of 97.71 it hit on Friday. The Federal Reserve is set to raise interest rates by 25 basis points at its two-day meeting that opens Tuesday. However, interest rate futures used to gauge the probability of further


Weaker-than-expected economic data from China and Europe and fears of a possible U.S. government shutdown spooked investors away from stocks toward the greenback and yen. The dollar index, which gauges its value versus six major peers, was little changed at 97.44, below the 19-month high of 97.71 it hit on Friday. The Federal Reserve is set to raise interest rates by 25 basis points at its two-day meeting that opens Tuesday. However, interest rate futures used to gauge the probability of further
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Dollar index near 19-month high on safe-haven bid amid global growth worries

The dollar held near a 19-month high on Monday, bolstered by safe-haven buying as heightened concerns of a global economic slowdown reduced appetites for riskier assets such as stocks and Asian currencies.

Weaker-than-expected economic data from China and Europe and fears of a possible U.S. government shutdown spooked investors away from stocks toward the greenback and yen.

“The dollar is clearly showing it is attractive during times of market stress,” said Ray Attrill, head of currency strategy at NAB in Sydney.

The dollar index, which gauges its value versus six major peers, was little changed at 97.44, below the 19-month high of 97.71 it hit on Friday.

The Australian dollar, whose fortunes are closely tied to China’s economy, was marginally lower at $0.7174. It lost 0.3 percent of its value last week as data showed Chinese November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy.

The offshore Chinese yuan was flat at 6.8974.

Apart from fears of a global economic slowdown, markets are also focusing on the likely trajectory of U.S. monetary policy.

The Federal Reserve is set to raise interest rates by 25 basis points at its two-day meeting that opens Tuesday.

The central bank has lifted rates eight times since December 2015 in a bid to restore policy to more normal settings after having slashed borrowing costs to near zero to combat the financial crisis a decade ago.

With the hike largely factored in by the market, larger moves in the dollar will be guided by the Fed’s forward guidance.

According to their projections in September, the median view among the Fed’s policymakers was for three rate hikes in 2019. However, interest rate futures used to gauge the probability of further hikes are pricing in only one hike in 2019.

“Any content that speaks to the difference between market pricing of one interest rate rise in 2019 versus previous Fed indications of three rises is very likely to move markets,” Michael McCarthy, Sydney-based chief markets strategist at CMC Markets, said in a note.

Traders believe that higher U.S. borrowing costs will likely hurt U.S. growth momentum and ultimately force the Fed to pause its monetary tightening path.

Recent comments by Fed officials have also been read as dovish by some analysts. Last month, Fed Chairman Jerome Powell said rates were near the range of policymakers’ estimates of “neutral” – the level at which they neither stimulate nor impede the economy.

“The Fed will most likely move from an auto-pilot mode to being data dependent,” said Attrill.

The dollar gained 0.1 percent over the yen in Asian trade to trade at 113.48. Interest rate differentials between the U.S. and Japan make the dollar a more attractive bet than the yen, according to some analysts.

The Bank of Japan has a meeting on Dec. 19-20, at which policy is expected to remain highly accommodative as inflation remains well below the its target.

The euro was also little changed at $1.1310, having lost 0.6 percent last week after weaker-than-expected data out of France and Germany suggested that economic activity in Europe remains weak.

Sterling remained under pressure in Asian trade, down 0.02 percent at $1.2582. British trade minister Liam Fox said on Sunday talks with the European Union to secure “assurances” for parliament on Prime Minister Theresa May’s Brexit deal will take time, with a decision expected in the new year.


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Pound holds most gains as PM May survives vote but Brexit in peril

The pound held onto most of the previous session’s gains on Thursday after British Prime Minister Theresa May survived a no-confidence vote, buying time to try to steer her unpopular Brexit deal through a deeply divided parliament. Investors are hoping to find out whether the ECB will start raising interest rates before ECB President Mario Draghi’s term ends in October next year, he added. “To cope with the slowdown, the Chinese authorities need a not-strong renminbi, but it can’t weaken too muc


The pound held onto most of the previous session’s gains on Thursday after British Prime Minister Theresa May survived a no-confidence vote, buying time to try to steer her unpopular Brexit deal through a deeply divided parliament. Investors are hoping to find out whether the ECB will start raising interest rates before ECB President Mario Draghi’s term ends in October next year, he added. “To cope with the slowdown, the Chinese authorities need a not-strong renminbi, but it can’t weaken too muc
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Pound holds most gains as PM May survives vote but Brexit in peril

The pound held onto most of the previous session’s gains on Thursday after British Prime Minister Theresa May survived a no-confidence vote, buying time to try to steer her unpopular Brexit deal through a deeply divided parliament.

The euro trod water ahead of a closely-watched policy meeting by the European Central Bank later in the day, after edging higher on news that Italy lowered its deficit target for next year and expected the European Commission to accept its new 2019 budget proposal.

The dollar index, which measures the greenback against six key rivals, was up a tad at 97.097. It had fallen from a near one-month high overnight, losing 0.4 percent, its steepest drop in two weeks.

In Britain, lawmakers from the ruling Conservatives held a secret ballot on whether they had confidence in May’s leadership of the party. Going into the vote and needing backing for her efforts to deliver Brexit, May had assured them that she would not lead the party into the next election due in 2022.

She won support from 200 of 317 Conservative lawmakers, and the mutiny by more than a third signalled that she was no closer to getting parliament’s approval for her plan to leave the European Union, making it likely that sterling’s respite would prove temporary. =

“Just after the actual result was announced, profit-taking dominated, (but) sterling stopped appreciating,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“That shows it’s not bad news, but it doesn’t fix the Brexit issue. In that sense, uncertainty continues.”

Sterling lost 0.1 percent on the day to $1.2614. It had bounced off a 20-month low of $1.2477 during the previous session, ending 1.1 percent higher on the day in the aftermath of the vote.

With Britain due to leave the EU on March 29, parliament’s opposition has suddenly opened up possibilities including a potentially disorderly exit with no deal or even another referendum on membership.

The euro held steady at $1.1367 after tacking on nearly half a percent during the previous session.

The ECB is all but certain to formally end its lavish bond purchase scheme on Thursday but will take an increasingly dim view on growth, raising the likelihood that its next step in trimming stimulus will be delayed.

“Everybody wants to have a hint regarding whether the ECB will raise interest rates next year but that will probably not happen,” said Yukio Ishizuki, senior currency analyst at Daiwa Securities.

Investors are hoping to find out whether the ECB will start raising interest rates before ECB President Mario Draghi’s term ends in October next year, he added.

Against the Japanese yen, the dollar rose nearly 0.2 percent to 113.45 yen as demand for riskier assets increased on growing signs of a thaw in Sino-U.S. trade relations, and on expectations that Beijing will implement more support measures for the economy.

Traders said China on Wednesday made its first major purchases of soybeans since U.S. President Donald Trump and his Chinese counterpart Xi Jinping hammered out a temporary trade war truce earlier this month.

The offshore yuan traded at 6.8717 per dollar, after strengthening almost half a percent from 6.8980 per dollar during the previous session.

Mizuho’s Yamamoto said he expected the yuan to remain “sandwiched” between strong and weak factors as the currency’s moves are not just driven by developments in the Sino-U.S. trade war but also by fears of a cyclical and structural slowdown in China’s economy.

“To cope with the slowdown, the Chinese authorities need a not-strong renminbi, but it can’t weaken too much — above seven renminbi per dollar,” Yamamoto said.

He added while China’s authorities don’t want a very strong renminbi, he did not expect Chinese interest rates to rise anytime soon.

“The interest rate differential between the United States and China will weigh on the renminbi,” he said.

China’s central bank faces a test next week if the U.S. Federal Reserve raises interest rates as widely expected.


Company: cnbc, Activity: cnbc, Date: 2018-12-13
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ECB’s Draghi speaks after central bank says its stimulus program to end

European Central Bank President Mario Draghi is speaking at the institution’s headquarters in Frankfurt following its latest monetary policy decision. The bank announced a formal end to its massive quantitative easing program and held interest rates steady on Thursday, as was expected. Analysts will likely look out for comments from Draghi on the ECB’s outlook for economic growth and inflation, as well as details on the central bank’s reinvestment plans for maturing bonds. Traders will also be l


European Central Bank President Mario Draghi is speaking at the institution’s headquarters in Frankfurt following its latest monetary policy decision. The bank announced a formal end to its massive quantitative easing program and held interest rates steady on Thursday, as was expected. Analysts will likely look out for comments from Draghi on the ECB’s outlook for economic growth and inflation, as well as details on the central bank’s reinvestment plans for maturing bonds. Traders will also be l
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ECB's Draghi speaks after central bank says its stimulus program to end

European Central Bank President Mario Draghi is speaking at the institution’s headquarters in Frankfurt following its latest monetary policy decision.

The bank announced a formal end to its massive quantitative easing program and held interest rates steady on Thursday, as was expected.

Analysts will likely look out for comments from Draghi on the ECB’s outlook for economic growth and inflation, as well as details on the central bank’s reinvestment plans for maturing bonds. Traders will also be listening out for any details on the institution’s eventual tightening of interest rates.

Other points of focus for investors include political uncertainty in the euro zone. Friction between Italy and the European Union over Rome’s 2019 fiscal plans have weighed on sentiment, while France’s government faces a no-confidence vote Thursday following the so-called “yellow vest” protests.


Company: cnbc, Activity: cnbc, Date: 2018-12-13
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Gold steadies near 5-month peak on subdued dollar

Gold prices were steady on Monday, having touched a fresh five-month peak early in the session, as the dollar weakened after a soft U.S. jobs report fuelled speculation that the Federal Reserve may stop raising interest rates sooner than expected. The Fed is widely expected to raise interest rates at its Dec. 18-19 meeting, but the focus is on how many rate hikes will follow in 2019. Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding


Gold prices were steady on Monday, having touched a fresh five-month peak early in the session, as the dollar weakened after a soft U.S. jobs report fuelled speculation that the Federal Reserve may stop raising interest rates sooner than expected. The Fed is widely expected to raise interest rates at its Dec. 18-19 meeting, but the focus is on how many rate hikes will follow in 2019. Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding
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Gold steadies near 5-month peak on subdued dollar

Gold prices were steady on Monday, having touched a fresh five-month peak early in the session, as the dollar weakened after a soft U.S. jobs report fuelled speculation that the Federal Reserve may stop raising interest rates sooner than expected.

Spot gold inched up 0.1 percent to $1,248.59 per ounce, as of 0813 GMT, after hitting its highest since July 11 at $1,250.55 earlier in the session.

U.S. gold futures rose 0.1 percent to $1,253.4 per ounce.

Weak data points from the United States have been putting pressure on the dollar index which is proving to be positive for gold, said Ajay Kedia, director at Kedia Commodities in Mumbai, adding that: “we expect a resistance level of $1,270 before the upcoming Fed meet.”

The dollar slid against the euro and the yen after data showed U.S. non-farm payrolls increased by 155,000 jobs last month, below economists’ median forecast of 200,000 jobs, and the wage increase was softer than expected.

Some Fed policymakers have struck a cautious tone about the economic outlook, possibly flagging a turning point in the monetary policy.

The Fed is widely expected to raise interest rates at its Dec. 18-19 meeting, but the focus is on how many rate hikes will follow in 2019.

Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion. Lower interest rates also tend to weigh on U.S. yields and the dollar, in which gold is priced.

“There is also some safe-haven demand coming back in gold,” said Argonaut Securities analyst Helen Lau.

Global stocks extended their slump on worries over slowing growth and fears that a fresh flare-up in tensions between U.S. and China could quash chances of a trade deal.

“A number of tailwinds are in place for it (gold) to move significantly higher during the month including falling U.S. interest rates, a declining or at least a stalling dollar, wobbly U.S. equity markets,” INTL FCStone analyst Edward Meir said in a note.

“Over the course of December, we see prices trading between $1,230-$1,285 per ounce.”

Meanwhile, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.20 percent to 759.73 tonnes on Friday.

Spot gold may rise into a range of $1,258-$1,266 per ounce, as it has broken a resistance at $1,245, according to Reuters technical analyst Wang Tao.

Among other precious metals, spot silver was down 0.2 percent at $14.59 per ounce, while palladium slipped 0.6 percent to $1,216.52.

Platinum edged 0.2 percent higher to $791.40 per ounce. Prices had slipped to their lowest since Sept. 12 at $779 in the previous session.


Company: cnbc, Activity: cnbc, Date: 2018-12-10  Authors: simon dawson, bloomberg, getty images
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If the Fed doesn’t raise rates this month, the market could panic, Cramer says

The Federal Reserve could cause “panic” on Wall Street if it reneges on its widely anticipated December interest rate hike, CNBC’s Jim Cramer said Friday. “Because he’s promised a rate hike, [Fed Chair Jerome Powell] risks stirring a wave of fear if he doesn’t tighten,” Cramer said as stocks fell on weaker-than-expected jobs results and trade worries. “It would be wrong to tighten, but if he doesn’t give us a full quarter-point rate hike, it will cause a panic,” the “Mad Money” host said. In fai


The Federal Reserve could cause “panic” on Wall Street if it reneges on its widely anticipated December interest rate hike, CNBC’s Jim Cramer said Friday. “Because he’s promised a rate hike, [Fed Chair Jerome Powell] risks stirring a wave of fear if he doesn’t tighten,” Cramer said as stocks fell on weaker-than-expected jobs results and trade worries. “It would be wrong to tighten, but if he doesn’t give us a full quarter-point rate hike, it will cause a panic,” the “Mad Money” host said. In fai
If the Fed doesn’t raise rates this month, the market could panic, Cramer says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-07  Authors: elizabeth gurdus
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If the Fed doesn't raise rates this month, the market could panic, Cramer says

The Federal Reserve could cause “panic” on Wall Street if it reneges on its widely anticipated December interest rate hike, CNBC’s Jim Cramer said Friday.

“Because he’s promised a rate hike, [Fed Chair Jerome Powell] risks stirring a wave of fear if he doesn’t tighten,” Cramer said as stocks fell on weaker-than-expected jobs results and trade worries. “Investors will start presuming that something must be wrong, very wrong, that things are worse than they thought.”

But even if the central bank decides that it’s worth taking a more data-dependent approach after the weaker jobs data, its chief has put himself in a difficult position with his recent statements, Cramer said.

“No one wants the Fed to tighten going into a slowdown, especially when we might be in a tariff war around the globe. People want the Fed to be flexible. Thanks to his previous comments, though, Powell’s in a lose-lose situation,” he said, pointing to Powell’s remarksthat interest rates were “just below” where they should be.

“It would be wrong to tighten, but if he doesn’t give us a full quarter-point rate hike, it will cause a panic,” the “Mad Money” host said. “I hate to say it, Mr. Powell, but, here goes: I told you so.”

In fairness, Cramer said he “totally” understood why the Fed would raise interest rates this month, citing still-strong Purchasing Managers’ Index reports, healthy retail sales and close-to-full employment.

“The fact is, though, the economy’s slowing and the stock market sure shows it. […] That’s why it’s so skittish,” he explained. The major averages have endured drastic intraday swings this week as investors fretted about a host of economic pressures, including but not limited to the U.S.-China trade dispute.

Earlier this week, a “yield curve inversion” between the three- and the five-year Treasury yields also set off warning bells on Wall Street and spurred a sharp sell-off in stocks.

“Maybe a creative Fed chief could square that circle by holding off on a rate hike, but maybe selling some of the long-term bonds that they’ve been sitting on since the financial crisis — a different kind of tightening that would fix the inverted yield curve situation,” Cramer said. “Although, … ideally, you don’t want any tightening and the Fed would simply sit tight.”

All things considered — including the S&P 500 index turning negative for the year — investors should prepare for more market swings in the coming weeks, the “Mad Money” host warned.

“I think we’re going to have to slog through these volatility sessions for a bit, as there are all sorts of difficult crosscurrents here” including U.S.-China trade relations and the weakness in shares of stock market bellwether Apple, he said.

“And, of course, an errant Federal Reserve that’s backed itself into a corner when it comes to the next rate hike,” he added. “Get used to these crosscurrents, because this is the new normal, at least for now.”


Company: cnbc, Activity: cnbc, Date: 2018-12-07  Authors: elizabeth gurdus
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Mortgage applications rise 2%, but buyers seem unimpressed by lower rates

Mortgage rates have now been falling for three straight weeks and that is reinvigorating the refinance business. Total mortgage application volume rose 2 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was still 36 percent lower than a year ago, when interest rates were lower. Mortgage interest rates are still 89 basis points higher than a year ago and home prices are still gaining, making home buying ever more


Mortgage rates have now been falling for three straight weeks and that is reinvigorating the refinance business. Total mortgage application volume rose 2 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was still 36 percent lower than a year ago, when interest rates were lower. Mortgage interest rates are still 89 basis points higher than a year ago and home prices are still gaining, making home buying ever more
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Mortgage applications rise 2%, but buyers seem unimpressed by lower rates

Mortgage rates have now been falling for three straight weeks and that is reinvigorating the refinance business. It is not, however, bringing many more buyers back to today’s very expensive housing market.

Total mortgage application volume rose 2 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was nearly 19 percent lower than the same week one year ago.

Refinance activity drove the volume, increasing 6 percent for the week. Refinances are highly rate-sensitive week to week, as borrowers seek to save money on monthly payments. Volume was still 36 percent lower than a year ago, when interest rates were lower.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 5.08 percent last week from 5.12 percent the previous week, with points decreasing to 0.44 from 0.46 (including the origination fee) for loans with a 20 percent down payment.

“Treasury rates continued to slide last week, driven mainly by concerns over slowing global economic growth and U.S. and China trade uncertainty. The 30-year fixed-rate fell for the third week in a row,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Mortgage applications to purchase a home rose just 1 percent for the week and were 0.2 percent higher than a year ago. Mortgage interest rates are still 89 basis points higher than a year ago and home prices are still gaining, making home buying ever more expensive. While the price gains are now shrinking, affordability is still at the lowest level in a decade and proving to be the biggest barrier to housing demand today; sales of both newly built and existing homes continue to suffer because of it.

Luxury homebuilder Toll Brothers saw new orders decline this fall, according to its earnings release this week. CEO Douglas Yearley blamed higher mortgage rates and high prices in California, where it sells a large share of its homes. Luxury buyers, it seems, are not exempt from today’s weaker affordability, and that is showing up in the size of loans for which borrowers are applying.

“We saw a decrease in the average loan size for purchase applications to the lowest since December 2017 ($298,000 from $313,000),” Kan said. “This is perhaps an indication that there are fewer jumbo borrowers, or maybe first-time buyers are having better success reaching the market as we close out the year.”

Mortgage rates continued to slide this week, falling to their lowest level in two months on Tuesday as the U.S. stock market sold off sharply and bond yields fell.

“Mortgage rates didn’t experience nearly as big of a move as the broader bond market,” said Matthew Graham, chief operating officer for Mortgage News Daily, noting that economic data at the end of the week, specifically the U.S. monthly employment report, could cause more dramatic moves. “If it’s weaker than expected, rates could easily continue lower, but if it surprises to the upside, the bounce back in rates could be somewhat abrupt.”


Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: diana olick, daniel acker, bloomberg, getty images
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‘Trumponomics’ writer Art Laffer: I am a ‘huge fan’ of Fed chief Powell’s handling of interest rates

Federal Reserve Chairman Jerome Powell, often criticized for increasing interest rates by President Donald Trump, has been effective at the helm of the nation’s central bank, conservative economist Art Laffer told CNBC on Wednesday. “I’m a huge fan of Powell’s,” said Laffer, formerly an economic advisor to presidents Trump and Ronald Reagan. The Fed later this month is expected to raise rates for the fourth time this year. Powell last Wednesday said that rates are “just below” neutral, perhaps i


Federal Reserve Chairman Jerome Powell, often criticized for increasing interest rates by President Donald Trump, has been effective at the helm of the nation’s central bank, conservative economist Art Laffer told CNBC on Wednesday. “I’m a huge fan of Powell’s,” said Laffer, formerly an economic advisor to presidents Trump and Ronald Reagan. The Fed later this month is expected to raise rates for the fourth time this year. Powell last Wednesday said that rates are “just below” neutral, perhaps i
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'Trumponomics' writer Art Laffer: I am a 'huge fan' of Fed chief Powell's handling of interest rates

Federal Reserve Chairman Jerome Powell, often criticized for increasing interest rates by President Donald Trump, has been effective at the helm of the nation’s central bank, conservative economist Art Laffer told CNBC on Wednesday.

“I’m a huge fan of Powell’s,” said Laffer, formerly an economic advisor to presidents Trump and Ronald Reagan. “I think he’s done a great job in normalizing interest rates.”

Trump, who actually appointed Powell as Fed chief, has repeatedly railed against hiking rates too aggressively, blaming Powell most recently in a Washington Post interview last week for stock market declines and GM’s planned plant closures and layoffs.

The Fed later this month is expected to raise rates for the fourth time this year. But the path next year is up for debate. After its September rate hike, the Fed projected three rate increases into 2019. The current target range for the central bank’s benchmark federal funds rate, which banks charge each other for overnight lending, stands at 2 percent to 2.25 percent.

Trump’s Post interview on Nov. 27 came one day before Powell appeared to walk back his comments from Oct. 3 that rates were a “long way” from so-called neutral, which for October led to the worst monthly stock market losses in about seven years.

Powell last Wednesday said that rates are “just below” neutral, perhaps indicating that concerns about much higher rates may no longer be warranted. The market then rallied three out of the next four sessions.

On Monday, which saw stocks on a two-session winning streak, Treasury Secretary Steven Mnuchin told CNBC that the president was pleased with Powell’s latest speech.

However, on Tuesday, the Dow Jones Industrial Average tanked nearly 800 points, or 3 percent. It was the biggest decline since October’s rout as investors worried about a bond-market phenomenon that’s historically signaled a possible economic slowdown. Lingering worries around U.S.-China trade were also to blame. The Dow and S&P 500 were able to stay out of a correction. But Tuesday’s decline sent the Nasdaq back into correction territory.

Co-author of the book, “Trumponomics: Inside the America First Plan to Revive Our Economy,” Laffer said he’s “very optimistic” about the economy, describing the Trump tax cuts as “kicking in beautifully.” The Laffer Curve, named after the economist, is a theory that basically argues that increasing tax rates beyond a certain point becomes counter-productive for raising tax revenue — and that when taxes are too high, tax revenues actually sink.

Laffer said he hopes the administration tackles runway government spending as its next agenda item. “If it is, I don’t see any reason for a recession. I think we’re going to continue on a long prosperous path with the sky’s the limit.”

On CNBC Tuesday, Commerce Secretary Wilbur Ross said the U.S. economy is in good shape. He blamed the media for stoking worries about a slowdown.

However, Laffer said he’s concerned about the uncertainty surrounding U.S. trade relations with China. “Watching all this play out in real time is terrifying to me.”

Over the weekend, Trump and Chinese President Xi Jinping reached a truce in their bilateral trade war, agreeing to a 90-day period of no new tariffs on each other’s goods as talks continue.

Mnuchin told CNBC Monday he’s hopeful the Trump-Xi trade cease-fire can be turned into a “real agreement” to address what the president feels are unfair trade practices by the Chinese. Ross said on CNBC Tuesday that Trump got “very good” assurances from Xi on trade.

(The New York Stock Exchange and the Nasdaq were closed Wednesday for the funeral of George H.W. Bush, the nation’s 41st president. They reopen Thursday on a normal schedule. U.S. stocks futures, which closed at 9:30 a.m. ET, reopen Wednesday evening at 6 p.m. ET.)


Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: matthew j belvedere
Keywords: news, cnbc, companies, fed, president, laffer, trumponomics, writer, powells, handling, fan, huge, told, powell, hes, rates, tax, trump, trade, interest


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Why investors near retirement should fear the big yield curve inversion

A normal curve with the two-year offering a lower yield than the 10-year is fundamental to how banks make money. Banks borrow short term at lower interest rates so that they can make long-term loans to borrowers at higher interest rates. The difference between those two interest rates, the positive spread, is their profit. There are a few important caveats: In a longer-range chart going back to 1962, there has never been a recession that wasn’t preceded by an inversion of the yield curve. Also i


A normal curve with the two-year offering a lower yield than the 10-year is fundamental to how banks make money. Banks borrow short term at lower interest rates so that they can make long-term loans to borrowers at higher interest rates. The difference between those two interest rates, the positive spread, is their profit. There are a few important caveats: In a longer-range chart going back to 1962, there has never been a recession that wasn’t preceded by an inversion of the yield curve. Also i
Why investors near retirement should fear the big yield curve inversion Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: mitch goldberg, guest contributor, scott olson, getty images, zinkevych, istock, blend images – hill street studios, brand x pictures, daniel grill, roger wright
Keywords: news, cnbc, companies, twoyear, curve, inversion, loans, big, fear, rates, making, interest, banks, treasury, investors, near, yield, market, retirement


Why investors near retirement should fear the big yield curve inversion

A normal curve with the two-year offering a lower yield than the 10-year is fundamental to how banks make money. Banks borrow short term at lower interest rates so that they can make long-term loans to borrowers at higher interest rates. The difference between those two interest rates, the positive spread, is their profit. If a bank is borrowing short term at a higher interest rate and making loans to borrowers at a lower interest rate, the difference is a negative spread.

In this interest-rate environment, banks would lose money by making loans. Not necessarily on all loans, but it does make some loans unfeasible and some less profitable, forcing banks to cut back on making loans, thereby choking off the access to credit markets that businesses need to grow.

This helps explain why bank stocks entered a correction on Tuesday. But the news is bad for all businesses.

More from Fixed Income Strategies:

Investors avoid emerging markets due to currency volatility

What to do with an old 401(k)? Very little

Save for retirement … even without an employer 401(k)

When it becomes harder for businesses to borrow, many companies cancel or delay projects and hiring. Weaker enterprises go out of business because they lose access to credit, which in turn causes layoffs. When this happens, it takes about a year, on average, for the U.S. economy to slip into a recession.

Many market pundits say that the history lessons from a flattening or negative yield curve is not relevant in today’s world of massive central bank intervention, encouraging foreign investors to scoop up long-term U.S. treasuries because their home-country government bond yields are much lower.

But to believe that “it’s different this time” means you’d have to believe that the bank-sector math in the above example stopped working. Last I checked, banks still borrow at short-term rates and lend at long-term rates, as long as it is profitable. In other words, central bank-induced market distortions do not change the basics of the banker’s math I described above.

There are a few important caveats: In a longer-range chart going back to 1962, there has never been a recession that wasn’t preceded by an inversion of the yield curve. Yet it doesn’t happen overnight. In fact, stocks have risen in the 18 months after an inversion, though after that all bets are off. Also important: This is a market stat that specifically refers to an inversion between the two-year Treasury and 10-year Treasury bond.

It looks more like that is going to occur, but it still has not happened. On Tuesday the 10-year was at 2.9 percent, still above short-term rates, if not by much — the two-year was at 2.8 percent. On Tuesday it was the five-year Treasury that slipped below the two-year and three-year bonds. In the last three recessions, the curve of the three-year and five-year had inverted an average 26.3 months before the recession.


Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: mitch goldberg, guest contributor, scott olson, getty images, zinkevych, istock, blend images – hill street studios, brand x pictures, daniel grill, roger wright
Keywords: news, cnbc, companies, twoyear, curve, inversion, loans, big, fear, rates, making, interest, banks, treasury, investors, near, yield, market, retirement


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Palladium hits record high, briefly surpasses gold price

Palladium soared to a record high on Tuesday, fueled by speculative interest and tight supplies of the autocatalyst metal, briefly surpassing bullion, which scaled to more than a five-week peak as the dollar slid. Spot gold was up 0.6 percent to $1,237.81 per ounce after earlier hitting $1,241.86, the highest price since Oct. 26. Palladium climbed 2.3 percent to $1,230.70 per ounce, having earlier jumped to an all-time high of $1,239.50. However, a few analysts said palladium’s rally could run o


Palladium soared to a record high on Tuesday, fueled by speculative interest and tight supplies of the autocatalyst metal, briefly surpassing bullion, which scaled to more than a five-week peak as the dollar slid. Spot gold was up 0.6 percent to $1,237.81 per ounce after earlier hitting $1,241.86, the highest price since Oct. 26. Palladium climbed 2.3 percent to $1,230.70 per ounce, having earlier jumped to an all-time high of $1,239.50. However, a few analysts said palladium’s rally could run o
Palladium hits record high, briefly surpasses gold price Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-04  Authors: getty images
Keywords: news, cnbc, companies, metal, dollar, briefly, price, hits, market, ounce, short, palladium, prices, gold, interest, surpasses, tight, high, record


Palladium hits record high, briefly surpasses gold price

Palladium soared to a record high on Tuesday, fueled by speculative interest and tight supplies of the autocatalyst metal, briefly surpassing bullion, which scaled to more than a five-week peak as the dollar slid.

Spot gold was up 0.6 percent to $1,237.81 per ounce after earlier hitting $1,241.86, the highest price since Oct. 26. U.S. gold futures settled up 0.56 percent at $1,246.60 per ounce.

Palladium climbed 2.3 percent to $1,230.70 per ounce, having earlier jumped to an all-time high of $1,239.50.

“We have a tight fundamental market, flat supplies, rising demand and on top of that, undoubtedly some speculative interest which has helped drive prices to all-time record highs,” Mitsubishi analyst Jonathan Butler said.

“For the moment, we don’t see anything changing; the metal remains in demand for industrial uses, speculators are covering their positions, lease market is very tight, and palladium forwards are in backwardation. We could see some higher prices from here in the very short term.”

The metal, used mainly in emissions-reducing auto catalysts for vehicles, has gained about 49 percent since mid-August.

“Palladium continues to fire long signals on all indicators and to make new highs, and is now challenging gold as reduced auto tariffs from China boost demand expectations in an already tight market,” analysts at TD Securities said in a note.

However, a few analysts said palladium’s rally could run out of steam, and there could be profit-taking at these high levels.

The metal’s 14-day relative strength index (RSI) was around 77. An RSI above 70 indicates a commodity is overbought and could lead to a price correction.

“Looking ahead we believe the dynamic of an investor long overhang that has been built up for palladium, combined with the short overhang in the gold market, will eventually contribute to gold re-establishing its premium over palladium,” analysts at Metals Focus wrote in a note.

Meanwhile, gold prices were on track for a second straight session of gains as the dollar continued to be pressured after the United States and China agreed to hold off on fresh trade tariffs for 90 days.

“Primarily, it is the weaker dollar that is providing assistance and that will be the key driver in the short term,” Capital Economics analyst Ross Strachan said.

“However, gold is going to find it difficult to sustain the current rally unless there is even more dollar weakness.”

Investors also kept a close eye on signals on the future path of interest rates next year by the U.S. Federal Reserve, with the central bank widely expected to raise rates at its policy meeting on Dec. 18-19. Meanwhile, spot silver jumped 1.04 percent to $14.52 per ounce, while platinum dipped 0.3 percent to $804.20.


Company: cnbc, Activity: cnbc, Date: 2018-12-04  Authors: getty images
Keywords: news, cnbc, companies, metal, dollar, briefly, price, hits, market, ounce, short, palladium, prices, gold, interest, surpasses, tight, high, record


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