Paul Walton
Bitcoin hits 18-month high, other markets take a breather
Bitcoin has risen 20% in the past four weeks, hitting an 18-month high, boosted by speculation that interest rates have peaked and hopes for a major Bitcoin ETF launch. Other than bargain hunting in the Russell 2000, up 1.0%, US equities were down on profit-taking. Gold took a pause and stepped from recent all-time highs. The oil price continued its downward move despite last week’s announced OPEC+ production cuts.
Yuan rally continues amidst signs that economic problems are bottoming out
Chinese administrators fear that the ongoing property slump will continue to worsen the financial position of the banking sector, and there are indications that this is being privately addressed. Two local insurance companies announced a fund to support local equity markets in one move. Purchasing Managers Index (PM) data gave mixed signals last week.
New all-time highs for the Dow and gold
The Dow Jones made another all-time high of 36,265 in morning trade, despite Fed chair Powell trying and failing to talk down hopes that interest rates will be cut in the spring. Gold rose 1.6% to a new all-time high of $2,089 per ounce. Paradoxically, weaker manufacturing data, and the belief that interest rates have thus peaked is the best explanation.
Dow makes all-time high in hopes of spring rate cuts
The Dow Jones achieved an all-time high of 35,802 in afternoon trade, signifying the equity market’s bullish tone spurred by hoped-for interest rate cuts. Traders are placing a 40% probability of a March rate cut in the Fed Funds rate. The Fed’s favored inflation measure cooled to 3.5% annual growth, welcome but still above its 2.0% target.
Gold approaches all-time high, oil rally continues
Gold stood out again, rallying within a few dollars of its August 2020 all-time high of $2,075, with supporters arguing that a peak in nominal and real interest rates would underpin a continuing bull market. Oil prices also continued to recover despite no news on next year’s production quota from OPEC. The Vix fear index continues to trade near multi-year lows, reflecting growing confidence that the economy can have a soft landing in 2024, with the Fed expected to cut rates by mid-year, even though it continues to insist that will not be the case.
Oil and Gold rally, stocks largely unmoved
Gold continued to impress, up 1.4% to $2,040 (versus a one-year high of $2,085). Oil spiked 2.2% to $76.5 per barrel. Today’s consumer sentiment and holiday spending data were very strong. Two Fed governors indicated different opinions on official interest rates: Michelle Bowman thinks the Fed will have to raise rates further to bring inflation down, but Christopher Waller said he believes current rates are about right. Stocks again made little progress, with the economically sensitive Russell 2000 off 0.6%.
USDBRL should reflect US data, IPCA-15, and the economic agenda in Congress.
Bullish factors November IPCA-15 may slightly accelerate versus October, bringing some points of concern regarding inflation dynamics for the upcoming months and potentially weakening the real. Bearish factors The possibility of advancing important economic agendas for the government in the National Congress could reduce the perception of fiscal risks for Brazilian assets and strengthen the real. Data for the American economy can reinforce the perception that the Federal Reserve will not raise interest rates further and contribute to the global weakening of the USD.
Small Gold ETP buying in China with interesting scope
The gold price is looking a little prematurely to the peak of the interest rate cycle. Seasonal December strength is historic, but do the fundamentals back it up this year? Technical considerations remain mixed but are supportive on balance. Gold and silver prices have been up 2.7% and 6.6%, respectively, since the start of last week – both are overbought in the short term.
Gold glistens, oil halts slide
Gold was the standout asset today, rising 0.5% to $2,013 per ounce (its peak was $2,050 earlier this year), while the slide in oil prices was halted at $75 per barrel. Bond and equity markets in quiet trading. This post-holiday week sees important data on inflation, consumer sentiment, and the publication of the Fed’s often persuasive Beige Book guide to economic conditions.
Yuan rallies as domestic property sector declines continue
China saw little market-moving economic or financial news last week. The continuing slow-motion decline of its property sector dominated the headlines as more property companies and now wealth managers reported an inability to repay their debts. The continuing yuan rally was the highlight, likely supported by domestic intervention by the People’s Bank of China.
Oil price falls on OPEC disarray, VIX falls again
Today's market highlight is oil off 2% on a simmering OPEC+ row. The Russell 2000 rose 0.7%, but stocks were stagnant in this holiday-shortened trading session today. The VIX made a new low below 13 for its current move, reflecting calm on Wall Street as traders watched shoppers flock to stores for Black Friday while another record was set for people traveling across this country for the holiday.