The expectation of debt reduction is still a nightmare for gold prices. The debt ceiling and severe epidemic limit the decline. This week, the non-agricultural drama finale

During the European session on Monday (October 4), the spot gold price maintained a fluctuating downward trend. During the period, the gold price fell by about $10. The market's expectations of the Fed's debt reduction continued to put downward pressure on the gold price, but the US government debt ceiling and the still severe global epidemic The situation limits the decline in the price of gold, and the focus of the market this week turned to the September non-agricultural employment report to be released by the US Department of Labor on Friday. Investors look forward to finding more clues about the Fed's debt reduction in November and the outlook for the US economy.

Inflation in the United States continues to rise, and the Fed's debt reduction expectations continue to put heavy pressure on gold prices

Although Powell's "hawkish" statement on the resolution last month was slightly unexpected, it is still within the acceptable range of the market. The industry has generally begun to digest and accept the fact that the Fed is about to tighten its monetary policy, and have predicted the subsequent "timetables."

First, the market has fully accepted the fact that the Fed will "shrink its debt." Economists pointed out that under their hypothetical baseline scenario, if the U.S. job market can achieve an average of 650,000 new jobs per month in the next three months and the employment gap is repaired to a level of 3.3 million or so, the Federal Reserve may start in December. Debt reduction". It is estimated that the scale of asset purchases will be reduced to 15 billion US dollars per month, which means that the "debt reduction" operation will last for 8 months and end in July 2022.

According to research, the current market also expects extreme scenarios where the probability of occurrence is extremely low and the Fed quickly ends bond purchases. This extreme scenario is that the United States starts debt reduction in January 2022, superimposed on short-term inflation rebound and medium- and long-term inflation expectations that continue to rise rapidly. In order to avoid uncontrollable inflation, the Fed will increase the amount of asset purchase reductions. The Fed is expected to spend 30 billion US dollars per month. The rate of reduction in asset purchases (US$20 billion in Treasury bonds and US$10 billion in mortgage-backed bonds). The entire debt purchase process will end within 4 months.

Second, the market has also begun to accept that the Fed will raise interest rates next year, rather than the year after that previously expected. Yang Aozheng emphasized that at this meeting, 9 of the 18 members of the Federal Open Market Committee of the Federal Reserve (an increase of two from June) believed that interest rates would be raised once in 2022 at the earliest; 17 members believed that by the end of 2023 The interest rate will be raised at least once.

Moore Investment Advisor analysts warned that the current inflation problem is temporarily difficult to solve. Moore Investment Advisor analysts mentioned that the Fed Chairman Powell admitted in the latest congressional question that inflation is more serious than expected. The epidemic has caused continuous blockades and isolations, causing bottlenecks in the supply chain, port congestion, and lack of work. Shipping prices remain high and the pressure of rising prices remains high. The inflation problem cannot be resolved for the time being.

In order to control prices, the market expects that the Federal Reserve will reduce debt and raise interest rates faster than expected. Jeremy Siegel, a long-term bull on Wall Street and a professor of finance at the Wharton School of Business at the University of Pennsylvania, warned that the market is unprepared for the impact of inflation and Wall Street may be on the verge of an unusually painful season. He emphasized that there are serious risks in price increases. Inflation will be a bigger problem than the Fed estimates. The Fed may be forced to accelerate the pace of reduction, but the market is unprepared for this.

Cleveland Federal Reserve President Meester said on Friday that the conditions for raising interest rates may be met by the end of 2022. Hacker, the president of the Philadelphia Federal Reserve, is concerned that inflationary pressures may not be as short-lived as expected.

The analysis indicates that many market gains are related to the liquidity provided by the Fed, but now the Fed may withdraw from the easing policy higher than expected due to the soaring inflation, which also means that interest rate hikes will occur faster, and both Very bad for the market.

In addition, analysts are optimistic about the future trend of gold. He said that as a hedge against inflation in the market, gold has become relatively cheap, and the popularity of Bitcoin is part of the reason why gold prices are still low. He also added: When inflation in the 1970s, everyone switched to buying gold. Now investors are turning to Bitcoin, which has caused gold to be ignored.


Chart: Gold price daily chart trend

The U.S. government debt ceiling issue has entered a countdown and supports safe-haven gold prices

The U.S. debt default has entered a countdown stage. If the U.S. Congress fails to pass the suspension or raise the debt ceiling bill this week, October 18 may be the first disaster in history for U.S. Treasury defaults.

The United States first set the national debt ceiling in 1917, and has so far raised the debt ceiling more than 100 times. Due to the new crown epidemic, the US government debt has increased by US$6.5 trillion in the past two years, so the new upper limit of US Treasuries has risen to approximately US$28 trillion. The US Treasury Secretary Yellen warned that if Congress does not stop or raise the debt ceiling, the US federal government will use up all its cash before the 18th, and the United States will risk defaulting on its debt within a few weeks, and a default may be catastrophic. , The market and economy will fall into chaos and difficulties.

U.S. government funds are about to run out. If the U.S. Congress fails to pass the suspension or increase of the debt ceiling bill next week, there will be the first disaster in history of U.S. Treasury debt default on the 18th.

Moore Investment Consulting analyst He Jiding said: In order to avoid the risk of the U.S. government inverting debt, many investors sold middle-hand bonds, causing bond prices to fall and pushing up bond yields.

We must know that once the US government is unable to issue bonds for financing due to the debt ceiling, it may default on debt. At present, US Treasury bonds have not defaulted, so their debt ratings are still extremely high, and short-term US Treasury bonds have been regarded as close to risk-free investment products. However, once the United States defaults on debt, not only may the US Treasury bond rating decline, but it may also affect the US dollar's status as a global reserve currency and trade settlement currency.

The U.S. Senate and House of Representatives passed a provisional spending bill last Thursday. After being signed by U.S. President Biden, it gave the federal government funds to maintain operations until December 3. However, once the hurdle is over, the Congress still has to rush. Raise or suspend the debt ceiling before October 18 to prevent possible US debt defaults. On Friday, the House of Representatives postponed a vote on the $1 trillion infrastructure bill. There were disagreements among the U.S. Democrats. The progressives hoped that the $3.5 trillion budget would move forward simultaneously with the infrastructure bill, but the moderates believed that the $3.5 trillion budget was too large. .

According to reports, Fitch Ratings stated on October 1 that the political dispute surrounding the US debt ceiling may damage the US's highest credit rating. The day before, S&P Global Ratings issued a similar severe warning.

It is also reported that the US debt ceiling has become a political tool or affects the economy and people’s livelihood. American media and analysts said that the debt ceiling issue in the United States is essentially a partisanship of the national interest. If the issue of the US debt ceiling is not resolved, the US federal government may default on debt, which will affect the US economy and the people's livelihood as well as the world economy.

According to the report, the debate in the US Senate on the issue of the US federal debt ceiling has fully demonstrated that there are obstacles to the political function of the United States, and it is very absurd and stupid. Regarding the issue of the federal debt ceiling, the Senate Republicans did not put forward clear policy goals, nor did they even put forward any concessions. Whether it was during the Trump administration or after Biden took office, Republicans and Democrats have repeatedly refused to vote for the debt ceiling.

Analysts believe that under the current US political system, the debt ceiling has become a political tool for the struggle between the two parties. This is also the reason why the debt problem has repeatedly developed into crises. From a historical point of view, the two parties have repeatedly waged games on the debt ceiling and did not reach an agreement until the last minute.

If the U.S. federal government defaults on debt, it will have a very negative impact on the United States and the world. US media reported that the US government debt default will destroy 6 million American jobs, nearly 50 million senior citizens’ pensions may be suspended or postponed, and the financial status of countless American families will be greatly affected.

Observers also pointed out that a debt default will severely weaken the creditworthiness of the US debt, and may even shake the US dollar’s status as the main reserve currency, triggering investors to sell US Treasury bonds and exacerbating global financial market turmoil.

Fed officials continue to fall into stock speculation scandals, weakening the Fed’s credibility and increasing the risk-averse support for gold prices

From Kaplan and Rosengren, to Barking, and now to Clarida, four Fed officials have been involved in the stock market storm in recent months.

Fed Vice Chairman Richard Clarida’s 2020 financial disclosures show that last year, Chairman Powell issued a statement stating that as the epidemic worsened, the day before possible policy actions, Clarida would be worth 1 to 5 million U.S. dollars. Only bond funds are realized and transferred to stock funds.

According to the description of the Office of Government Ethics, Clarida liquidated Pacific Investment Management’s bond fund on February 27, 2020, and purchased PIMCO’s StocksPlus stock fund and USMMV ETF on the same day. Clarida conducted five transactions that year, and the other two included the sale of Shwab SCHK ETFs valued at US$500,000 to US$1 million on August 3 and the purchase of USMV ETFs valued at US$250,000 to US$500,000.

It is worth noting that Clarida was an executive of PIMCO. On the day of the transaction, Clarida said he was not staying in his Washington office, but was visiting faculty and students at Yale University in New Haven, Connecticut. His schedule shows that he had a phone call with a member of the Federal Reserve at 4:45 pm after the stock market closed on February 27. He had also held several meetings with Fed staff in the previous days.

A Fed spokesperson speaking on behalf of the vice chair said: Vice Chair Clarida’s 2020 financial disclosures show that his account has undergone a pre-planned rebalancing, and these transactions were when he was involved in discussing the Fed’s response to the emergence of the coronavirus. Executed before the operation, not during the epidemic control period. The fund is selected with the prior approval of the ethics officer of the board of directors.

When observing Clary’s balance sheet, two things have to be noted: According to Clarida, cash is by no means rubbish, but there are millions of dollars between his bank account and money market account. The difference; judging from his actively decentralized bank accounts, he has little confidence in the stability of the US banking system.

From Kaplan and Rosengren, to Barking, and now to Clarida, four Fed officials have been involved in the stock market storm in recent months. At present, Kaplan and Rosengren have both proposed to leave.

Analysts of Voluntary Guide to Conduct for Senior Officials pointed out that on the surface, we can see the “signs” of the Fed’s large-scale insider trading, which makes people more aware of the Fed’s integrity, ethics, and especially the ability to think clearly. Doubts. In fact, the Fed has formulated clear guidelines for the trading activities of policy makers.

Fed officials should be cautious to avoid participating in any financial transactions that occur at sensitive points in time, because that would make people think that they are trading through the Fed’s inside information. The guide also mentions that they should avoid transactions that may "make their personal interests conflict with system interests and public interests."

The global new crown epidemic situation remains severe, suppressing economic prospects and supporting gold prices

According to the latest statistics from Johns Hopkins University in the United States, as of 8:21 on October 3, GMT+8, there were a total of 234,574,344 confirmed cases of new crowns worldwide, and a total of 4,796,466 deaths.

In the Americas, according to the latest data released by Johns Hopkins University, the United States has a total of 43,658,872 confirmed cases and a total of 700,958 deaths.

According to the report, based on the analysis of public health data, the United States reported an average of more than 2,000 new crown deaths every day in the past week, which is equivalent to about 60% of the peak number of deaths in January this year. At the same time, the United States still ranks first in the world in terms of the number of confirmed cases and the number of deaths, accounting for 19% and 14% of all confirmed cases and deaths reported globally.

On October 3, local time, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said in an interview with ABC that although the number of new cases of new coronary pneumonia in the United States has dropped significantly within three months, The number of hospitalizations related to the new crown and the average daily new cases have fallen by 30% in the past month, but the indicator of new cases of new crown pneumonia may still increase sharply.

Regarding the data that more than 700,000 people died from the new crown virus in the United States, Fauci said that although the deaths caused by the new crown epidemic are inevitable, the United States could have done better. If more people were vaccinated against the new crown, the death toll would be significantly reduce. Fauci emphasized that there are still 70 million people eligible for the new crown vaccine in the United States who have not yet been vaccinated, and this number is still in the danger zone, which may lead to a rise in the indicator of new cases of new crown pneumonia, which is already declining.

Regarding Merck's antiviral drug monabiravir, Fauci believes that this drug "will definitely not" replace the new crown vaccine, but he added that the drug has a bright future for implementation.

On the 1st, Merck announced on the 1st the interim analysis data of the phase III clinical trial of the oral anti-coronavirus drug monabiravir jointly developed by it and Richbarker Biopharmaceuticals. The results showed that the drug can hospitalize or die patients with mild to moderate COVID-19 The risk is reduced by about 50%. However, experts said that the safety of monabiravir remains to be seen.

According to data released by the Brazilian Ministry of Health on October 1, local time, 18,578 newly diagnosed cases in Brazil in a single day, a total of 21,445,651 confirmed cases; 506 new deaths, a total of 597,255 deaths; a total of 20,432,643 cured cases.

In Europe, Greece's recent death toll from the new crown ranks among the top in Europe. According to the Greek official report on October 1, local time, Greece has newly confirmed 2636 cases in a single day, with a total of 658,368 confirmed cases; 32 new deaths, with a total of 14,860 deaths.

The research director of the Finnish Fur Breeders Association, Jussi Peura, said on October 1 that Finland will inject an experimental new crown vaccine called FurcoVac for the country's farmed minks, and plans to complete the vaccination before the end of January next year. Peura said that it is expected to invest 500,000 doses of vaccine for this vaccination, and FurcoVac is currently the only new crown vaccine used in Europe for water minks.

Since the outbreak of the new crown epidemic, Denmark, the United States, Italy, the Netherlands, Spain, Sweden and other countries have reported the discovery of the new crown virus in mink farms. The World Health Organization stated at the end of last year that the new crown virus was transmitted from humans to minks, and then spread between minks, and there is a risk of transmission to humans again.

In Asia, according to a report from the Ministry of Health of Cambodia on October 2, there were 174 new confirmed cases in the country in a single day, with a total of 113,000 confirmed cases; 24 new deaths and a total of 2,360 deaths; 535 new cases were cured and discharged, and a total of 10.3 were cured. Million cases. Among the newly confirmed cases, 153 were community-transmitted infections and 21 were imported confirmed cases.

In Africa, according to data released by the African Centers for Disease Control and Prevention on October 2, local time, a total of 8,326,925 confirmed cases and a total of 211,842 deaths in the region.

As of October 2 local time, the total number of confirmed cases of new crown pneumonia in South Africa reached 2,904,307, and the number of deaths reached 87,705, ranking first in Africa for confirmed and dead cases of new crown pneumonia.

This week the market's focus shifts to the US September non-agricultural employment report

The September meeting of the Federal Open Market Committee (FOMC) hinted that the Fed will almost certainly announce a reduction plan in November. One unsatisfied reduction condition is that the improvement of the job market "makes substantial progress." As the only latest employment report obtained by FOMC attendees before the November meeting, the non-agricultural employment report to be released this Friday will become a decisive data point, and the reduction arrangement will be finalized.

The threshold for changing the currently widely expected downsizing schedule is high. According to calculations, unless this week's non-agricultural employment report is disappointing and shows an increase of less than 240,000, the improvement in the job market before November will not be able to meet the "substantial progress" standard.

Economic research predicts that this week's report will show that non-agricultural employment has increased by more than 750,000. Since the Supplementary Unemployment Benefits ended on September 6, the number of continued claims has fallen by 6.2 million. With more than 10 million job vacancies, even a small number of people receiving unemployment insurance re-enter the labor market, which may have a significant boost to employment data in September and the next few months.

The number of first-time jobless claims in the coming weeks (announced on Thursday) may show that more people no longer receive unemployment insurance. However, it may take several months for the labor market to re-absorb this part of the population. Many people may be reluctant to work in the service industry due to concerns about contracting the new crown virus. New infections peaked at the beginning of September, which should improve the demand situation of the service industry in the future (ISM Service Industry Index, Tuesday).

Regarding the labor market in the United States, the United States Department of Labor issued a report in September earlier that there were 10.9 million job vacancies in the United States in July, setting a record high for the fifth consecutive month. The labor shortage in the United States is affecting many industries. Whether it’s blue-collar or white-collar jobs, companies say it’s difficult to recruit suitable employees now, the recruitment cycle is longer, and job seekers demand higher salaries, which brings greater production efficiency and management costs to the company challenge.

In fact, the number of vacancies in the United States hovered around record highs throughout the summer. The June job vacancies and job turnover data are already in this state. The number of vacancies reached a record high of 10.1 million. Economists had previously predicted that the June data would be slightly lower than the 9.2 million in May. One factor behind the surge in job vacancies: Employers hired fewer people. In July, 6.67 million were recruited, compared with 6.83 million in June. This brings the ratio of the number of job vacancies to the number of recruits to a record 1.64. This indicator aims to measure how difficult it is for employers to recruit employees. In addition, the number of resignations rose slightly, indicating that the renewed pandemic concerns have made people look at employment more cautiously.

At the end of August, the number of job vacancies on a well-known job search website increased by about 39% from February 2020 before the outbreak. This is a slight increase from the weekly data at the end of July, when the number of job postings posted at the time was 37% higher than in February 2020. The increase in the number of job vacancies in August was mainly attributable to increased demand for jobs that can be done at home, such as software development. Childcare job vacancies have decreased, while job vacancies in the construction industry and restaurants have increased only slightly.

According to statistics, the US employed 159 million people before the epidemic. In June 2021, the employed population was 152 million. Among them, there was an employment gap of 3.77 million due to unemployment and 3.36 million due to exit from the job market. If compared with the post-financial crisis, the peak employment gap after the crisis was 8.25 million, of which 90% came from the increase in the unemployed population.

The International Labor Organization believes that the labor market crisis caused by the new crown pneumonia epidemic is far from over, and the employment growth during the recovery period will not offset the job losses caused by the epidemic until at least 2023.

The International Labor Organization predicts that the global "employment gap" caused by the new crown pneumonia epidemic will reach 75 million in 2021 and drop to 23 million in 2022. The total number of unemployed people worldwide is expected to reach 205 million in 2022. Significantly more than 187 million in 2019, the global unemployment rate will reach 5.7%.

GMT+8 19:19, quotation by Huitong Yihuitong software, spot gold price is 1751.00 US dollars per ounce