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European chip stocks remained weak, with BESEMI down 6%, and ASMI, Infineon, and ASML falling between 2.4% and 3.4%.The Hungarian central bank kept its benchmark interest rate at 6.25%, in line with market expectations.April 28th - As countries seek more funding for defense and advanced technology, the European Union is exploring the possibility of postponing repayments of billions of euros in debt incurred during the pandemic. According to sources, the European Commission, the EUs executive body, is preparing an analysis report on this possibility. Several countries, including France, have urged the EU to postpone repayments originally scheduled to begin in 2028, arguing that budget austerity and urgent spending needs should take priority. This move reflects a shift in the EUs attitude towards debt. Repayment of pandemic-era debt has become a core issue in the EUs negotiations on the 2028-2034 budget. EU leaders, at a summit in Cyprus last Friday, demanded that the European Commission conduct a repayment analysis. French President Macron stated in Athens on Saturday: "It makes no sense to repay COVID-19 debt now, given the demand for European securities and bonds; it will negatively impact the budget. We incurred debt during the pandemic. Now we are being told: we need to pay off the debt as soon as possible. This is foolish."On April 28, it was learned from Iranian sources that a liquefied natural gas (LNG) carrier had passed through the Strait of Hormuz. This marks the first time an LNG carrier has transited the Strait since the start of the conflict between the US, Israel, and Iran. The ships background is currently unclear, and its country of origin and final destination have not yet been released.On April 28th, sources revealed that Saudi Aramcos main export facility in Al-Juama, damaged at the end of February, disrupted liquefied petroleum gas (LPG) supplies, leading the company to extend the suspension of LPG shipments into May. Aramcos LPG exports had been suspended since a supporting structure at the facility collapsed before the outbreak of the Middle East conflict in February, causing prices to rise and buyers scrambling for alternative supplies. Subsequently, the conflict virtually closed the Strait of Hormuz, a major export route, causing energy shortages in Asia. Some sources indicated that Aramco has informed some buyers that it has failed to carry out necessary repairs at the Al-Juama facility. This means that even if the Strait of Hormuz reopens, no shipments will be delivered next month. The company stated on February 26th that "planned shipments from Al-Juama in the coming weeks will be cancelled," but did not provide further details.

Gold Price Forecast: The XAU/USD pair's decline is moderating as the price recovers from recent lows

Daniel Rogers

Aug 22, 2022 14:41

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As analysts at TD Securities explained, Chair Powell's remarks will likely be "a key avenue for the Fed to push back against the notable easing in financial conditions sparked by his last remarks, which has seen markets price in rate cuts immediately following the rate hiking cycle and is likely inconsistent with the Fed's inflation mandate." As market expectations for rate reduction diminish, speculative demand for precious metals should diminish more.

 

A chorus of Fed speakers has addressed us in the lead-up to the event. In an interview with CNN, Mary Daly, president of the Federal Reserve Bank of San Francisco, stated that it was far too early to declare victory on inflation and that a 50 basis point or 75 basis point increase would be reasonable.

 

Daly's bluster stirred up the dust and pushed the US dollar up 0.12% on the day to 106.78; since then, it has skyrocketed to 108.285 in Tokyo's opening hour. US bond yields continue to rise, following Europe's selloff, and the yield curve steepened. Yields on 2-year government bonds increased from 3.23% to 3.24% thru 3.29%, while yields on 10-year government bonds increased from 2.90% to 2.97%. The rising interest rates are particularly bad news for gold investors, as the yellow metal is extremely sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.

 

Fed funds futures traders assign a likelihood of 55% that the Fed will raise rates by 50 basis points in September and a probability of 45% that rates will be raised by 75 basis points. According to calculations by Reuters and data from the US Commodity Futures Trading Commission published on Friday, speculators' net long positioning on the US dollar continues to expand, while net short positions on the euro increase. The value of the net long dollar position increased to $13.37 billion during the week ending August 16, according to statistics from the CFTC. Since four weeks ago, net long dollar positions have climbed for the first time.

 

Core PCE will be significant in data preceding the Jackson Hole Symposium. According to analysts at TD Securities, prices likely slowed significantly in July and at an even slower rate than the core CPI (0.1% vs. 0.3%).

 

"Shelter weights continue to be a major contributor to this disparity. The YoY rate likely decreased to 4.6% from 4.8% in June, indicating that the series has reached its apex. Separately, personal expenditure likely fell to a still robust 0.6% MoM pace after seeing an even greater 1.0% MoM increase in June.


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