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On September 17, TA Securities warned that if the Federal Reserve holds interest rates steady and incoming data continues to weaken, the market could interpret this as a policy mistake. This scenario could prompt investors to shift toward healthcare and consumer staples stocks, leading to outflows from financial, industrial, and growth-reliant technology sectors. U.S. Treasury prices could rebound, while overall risk appetite could fade.On September 17, TA Securities predicted that if the Federal Reserve cuts interest rates by 25 basis points to a range of 4.00%-4.25% as expected, the market will react by "buying the forecast and selling the reality," as most investors have already priced in a 25 basis point rate cut. A 25 basis point rate cut would be interpreted as a cautious, supportive, "insurance" cut aimed at maintaining growth momentum without signaling distress. This environment typically favors consumer staples, healthcare, and technology stocks, which benefit from lower borrowing costs and have defensive or secular growth characteristics. Financial stocks, on the other hand, tend to underperform the broader market due to the impact of narrowing interest rate spreads on earnings.On September 17, Russias weekly crude oil exports fell sharply, driven by a decline in cargo volumes at Baltic ports due to Ukrainian drone attacks that affected facilities in key Russian regions. Vessel tracking data showed that Russias average daily seaborne crude oil exports were approximately 3.18 million barrels in the week ending September 14, down 934,000 barrels from the previous week, marking the largest weekly drop since July of last year. However, the less volatile four-week average of exports rose slightly: the week ending September 14 was revised to an average of 3.46 million barrels per day, higher than the revised average of 3.42 million barrels per day in the week ending September 7. This rebound was due to the previous weeks exceptionally large exports, when Russias exports of Urals crude oil through Black Sea and Baltic ports drove cargo volume growth. The four-week average data can more clearly reflect the underlying trend.The U.S. building permit monthly rate in August was -3.7%, in line with expectations of 0.60% and the previous value of -2.20%.The annualized monthly rate of new housing starts in the United States in August was -8.5%, in line with expectations of -4.4%. The previous value was revised from 5.20% to 3.4%.

Before Fed Hints And A Flood of U.S. Data, Gold's Early-year Rally Fizzles

Haiden Holmes

Jan 18, 2023 11:21

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The yellow metal held below a level not seen in eight months on Wednesday as markets remained cautious ahead of a flurry of Federal Reserve speakers and U.S. economic data due this week.


Despite the fact that projections of a less aggressive Federal Reserve and the possibility of a recession have spurred strong gains in gold over the past two weeks, traders are still looking for further confirmation of this trend. This week, several Fed officials are expected to appear, with Vice Chair Lael Brainard on Thursday being the most notable.


Numerous U.S. economic metrics will also shed insight on the performance of the world's largest economy in December, beginning with producer price index inflation, retail sales, and industrial output data expected Wednesday evening.


Spot gold remained constant at $1,908.74 per ounce at 19:19 EDT, while gold futures rose 0.1% to $1,911.30 per ounce (00:19 GMT). Tuesday saw declines of 0.5% for both assets.


Last week, gold climbed sharply to a more than eight-month high on the strength of a falling dollar and growing concerns of a recession this year. The yellow metal is presently trading almost $160 behind its all-time high due to an increase in wages that the Federal Reserve would hike interest rates at a slower pace this year.


This week, the dollar rebounded from a seven-month low against a basket of currencies, regaining some momentum. As traders awaited a Bank of Japan policy meeting slated for later in the day, dollar gains were limited.


Given that the BOJ's ultra-loose monetary policy tightening portends greater global economic headwinds, any signals of hawkishness from the central bank might shock the dollar and provide extra support for gold.


Other precious metals maintained tight ranges on Wednesday.


In response to signs of economic strength in China, the world's largest copper importer, copper prices dropped significantly on Wednesday.


Futures for high-grade copper fell 0.2% to $4.2272 a pound after gaining over 2% in the prior session.


According to figures released Tuesday, China's economic growth slowed sharply in 2022 compared to the previous year. However, better-than-expected growth in the fourth quarter, particularly in December, has fuelled optimism that the nation will enjoy a resurgence this year following the lifting of the majority of anti-COVID measures.

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