North American News
Fed’s Harker sends yields higher
Looking at the US stock market to hours the close:
- Dow industrial average is down 86 points or -0.28% at 30337
- S&P index down -28 points at -0.77% at 3668.70
- NASDAQ index is down -65.58 points -0.61% at 10615.45
- Russell 2000 is down -20.55 points or -1.19% at 1705.19
US leading index for the month of September -0.4% vs -0.3% estimate
- Leading index for September 2022
- Leading index fell -0.4% vs. -0.3%
- prior month was revised to 0.0% from -0.3% previously reported
- index comes in at 115.9 after remaining unchanged in August
- the index is down 2.8% over six-month period from March to September 2022. That is a reversal from its 1.4% growth over the previous 6 months
US treasury sells $25 billion of 5year TIPS at a high yield of 1.732%
- US sells 5 year TIPS
The US treasury sold $25B of 5 year TIPS at a high yield of 1.732%
- Bid to cover was 2.38X vs. six-month average of 2.64X
- Tail 1 bp vs six-month average of -3.1 basis points
- directs 17.0% vs. six-month average of 13.2%
- Indirects 75.3% vs. six-month average of 75.0%
- Dealers 7.7% vs. six-month average 11.8%.
US existing home sales for September 4.71M vs 4.70M estimate
- US existing home sales for September 2022
- Existing home sales 4.71M vs 4.7M estimate. The number took the level below the June 2020 level of 4.72M.
- Prior month 4.8M revised to 4.78M
- inventory 1.25 million or 3.2 month supply (unchanged from prior month). A balance market between buyers and sellers is considered to be near 6 months.
- Median home sale price came in at $384,800. That’s -8.4% from September 2021
US 10 and 30 year yields reach new cycle highs
- Yields moving higher again
The US 10 and 30 year bonds are heading new cycle high yields.
- 10 year yield trades at 4.201% up 7 basis points on the day. The high yield reached 4.203%.
- 30 year yield 4.194% up 6.7 basis points. The high yield reached 4.198%
Commodities
Gold bears eye the cycle lows for end of week
- Gold bears could come under pressure into the closing sessions of the week.
- The US dollar has lagged behind the rise in yields but is making a comeback from a confluence of key daily support.
The gold price has moved back to a flat position on the day to print around $1,629.25 at the time of writing having travelled between a low of $1,622.54 and $1,628.93 thus far, reversing two losing sessions as the US dollar eased.
There has been a disparity in the price of the US dollar and US yields which may come back to bite the gold bugs before the week is out, however. Federal Reserve Bank of Philadelphia President Patrick Harker said Thursday the central bank is not done with raising its short-term rate target amid very high levels of inflation. His most hawkish of comments sent yields to fresh cycle highs, the strongest in a decade. He said the Fed has made disappointing progress at lower inflation and added that inflation in 2023 would fall to around 4% and 2.5% in 2024, which is still well above the 2%. as such risk sold off, yield and the greenback rallied weighing on the price of gold.
Bond yields rose, with the US 2-year note last seen paying 4.593%,0.75%after reaching to the highest since 2008 at 4.614%:
Silver climbs above $18.60 amid a soft US Dollar, high US bond yields
- Silver price capitalizes on US Dollar weakness, despite US bond yields hurdling the 4% threshold.
- Fed officials continued reiterating that inflation is too high, that rates need to be restrictive, and may peak close to 5% in 2023.
- Silver Price Forecast (XAG/USD): An ongoing upside correction is on the cards and may test the 50-day EMA around $19.15.
Silver price bounces off weekly lows around $18.20s and climbs to the $18.70 area amidst elevated US Treasury yields. The US Dollar could not capitalize on the hawkish rhetoric of Philadelphia’s Fed Patrick Harker, while US economic data was mixed.
Silver climbs despite Fed’s hawkish commentary and mixed US data
Philadelphia Fed President Patrick Harker said that the Fed would continue to hike rates “for a while” and expected the Federal funds rate (FFR) to be “well above 4%” by the end of the year. Of late, the Federal Reserve Governor Lisa Cook said that to curb high inflation, it would require to continue to tighten monetary conditions and then keep them “for some time.”
Given that the Federal Reserve’s measures had already impacted segments of the economy, some are lagging, like the labor market. The US Department of Labor reported that unemployment claims for the last week rose by just 214K less than the 228K foreseen by analysts. At the same time, the Philadelphia Fed reported business conditions for the area contracted by 8.7, more than estimates but less than September’s 9.9 fall.
Later, the US housing market prolonged its deterioration as September’s Existing Home Sales shrank by 1.5%, to 4.71 million houses, vs. estimates of a 2.14% contraction.
In the meantime, the US Dollar Index, a gauge of the buck’s value against a basket of peers, is trimming some earlier losses, down by just 0.05% at 112.849, a headwind for XAG/USD. US bond yields continue to rise, with the 10-year rate extending its gains by eight bps, hitting 4.215%, its highest level since 1990.
EU News
European major indices close higher on the day and near their intraday highs
- Spain’s Ibex up 0.82% leads the way
The European major indices are closing with gains and near their highs.
- German DAX, +0.12% at 12756 point. The high price reached 12818.34. The low price was at 12628.78
- France’s CAC +0.65% at 6080.11. The high price reached 6103.50. The low price extended to 6029.53
- UK’s FTSE 100 +0.26% at 6942.65. It’s high price reached 6954.21. It’s low price was at 6894.85
- Spain’s Ibex +0.82% at 7645.51. It’s high price reached 7660.70. It’s low reached 7552.10
- Italy FTSE MIB, +1.0% at 21687.72. It’s high price reached 21753.75. It’s low reached 21397.8
UK PM Truss says she will resign. Will step down as soon as a new leader is chosen
- The term for PM Truss started on September 6th
The beleaguered UK PM Liz Truss says she will resign. Her term started on September 6.
- The leadership will be completed in the next week
- Will remain in place until a new leader is chosen
Other News
Fed’s Harker: Fed to keep raising rates for a while
- Philadelphia Fed Pres. Harker speaking. Voting member in 2023
- Fed to keep raising rates for a while
- needs to see sustained drop in inflation to change policy outlook
- Fed actively trying to slow economy to curtail fresh inflation
- Fed has made disappoint progress at lower inflation
- Fed funds rate likely well above 4% by year-end
- future Fed rate actions will be driven by how the data performs
- expects Fed policy to stay restrictive for a while
- sometimes next year Fed cannot stop hikes, take stock of policy impact
- GDP likely flat this year and rise by 1.5% next year
- inflation likely to fall around 4% next year at 2.5%
- US unemployment to rise to 4.5% next year. Job market to remain healthy
Cryptocurrency News
Ethereum Price: How ETH traders can target the low-hanging fruit
- Ethereum price shows no signs of moving out of the $1,440 to $1,280 barriers.
- Investors could get a potential drop to $1,220 before market makers trigger a run-up to $1,343 and $1,402.
- A daily candlestick close below $1,220 will invalidate the bullish thesis for ETH.
Ethereum price continues to consolidate between two crucial barriers with no signs of breaking out. This development could change as ETH has slithered close to breaking below a stable support level.
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