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Boeing service executives said that the supply of cockpit windows is lower than expected, which could lead to delivery delays.Boeing service executives said flight hours in most regions continued to show moderate to good growth.June 7th - According to sources familiar with the matter, U.S. Treasury Secretary Bessenter instructed his team on June 6th to "assess the situation in Gulf allies and calculate the costs of repairing damage caused by Iran." The sources stated that the U.S. intends to utilize relevant mechanisms to transfer frozen Iranian assets to Gulf allies to fund their efforts to "address potential future damage from Iran and carry out reconstruction and repair work." The U.S. will also consider whether to use Iranian assets "to compensate for past losses."June 7th - As the conflict with Iran triggers global inflationary pressures, the European Central Bank (ECB) is expected to raise interest rates by 25 basis points next week, becoming the first major central bank among the G7 to tighten monetary policy. Markets anticipate at least one more rate hike this year. In contrast, the Bank of Canada is likely to keep its rates unchanged, while the Federal Reserve and the Bank of England are expected to remain on hold this month, observing the impact of the Iranian conflict. ECB officials aim to ensure that inflation in the Eurozone does not become deeply entrenched, but a rate hike would come at the cost of further dragging down an already weak economy. ECB President Christine Lagarde is likely to provide a clearer signal on the next steps at the press conference following the decision. Meanwhile, the ECB will also release its quarterly economic forecasts, assessing different scenarios of the energy shocks impact on the regional economy.On June 7th, Willie Walsh, Director General of the International Air Transport Association (IATA), stated that rising jet fuel prices are expected to lead to more airline bankruptcies and industry consolidation. He pointed out that a merger between United Airlines and American Airlines is unlikely due to regulatory hurdles. Walsh also stated that once the Middle East conflict subsides, airlines and hubs in the Gulf region will regain market share. Furthermore, despite disappointing progress in clean fuels, IATA remains committed to its 2050 net-zero emissions target.

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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