DAILY REPORT : Tuesday 15 May 2018

MACRO: Cleveland Fed President Loretta Mester spoke in Paris on Monday, discussing the federal funds pathway and noting that the rate may need to exceed the long run targeted level for a brief period of time in order to maintain policy goals. Mester also commented that she does not expect inflation to pick up sharply, and while close to the Fed’s 2 per cent target, it is likely to take one to two years to reach this on a sustainable basis. Equity markets in the U.S. posted modest gains on Monday, finding direction from an easing of trade tensions between the U.S. and China in lieu of major data releases. The DJIA once again ended higher, marking the eighth consecutive positive session, adding +0.27% to 24,899.41 points. The S&P 500 benefitted from strength across healthcare (+0.65%) and energy (+0.63%) to end +0.09% higher at 2,730.13 points and the Nasdaq crept +0.11% higher to 7,411.32 points. The greenback recovered sharply from early session weakness in New York on Monday, in the process snapping a three-session losing streak as the buck made notable gains against the Euro as political risks continue in Italy. Treasury yields in the U.S. edged higher on Monday as the 10-year test 3% and the two-year added +0.7bps to 2.545%. Oil futures spiked higher on Monday to reverse the majority of Friday’s declines, with gains underpinned by fresh violence in the Middle East. WTI added +0.8% to just over USD $70 per barrel, while Brent crude surged +1.8% to USD $78.50 per barrel.

PRECIOUS: Another soft session for bullion during Asian hours on Tuesday, as the greenback ripped higher and U.S. 10-year yields pushed above 3%. Offers toward USD $1,315 capped any early session gains, and it soon became apparent that bullion would test toward USD $1,310 following the previous session failure to hold USD $1,320 even amid a stronger euro. It's difficult to find a catalyst for the continued dollar strength and conversely bullion weakness, however the trend is currently skewed to the downside and we are likely to once again test toward the lower end of the recent range. Silver's recent inability to consolidate through USD $16.80 has now opened up a test of the recent lower end of the range toward USD $16.00 - 16.20, however much like gold there does not currently look to be any catalysts to push the metal through the level. The major market mover today was palladium, collapsing around -3% with no material news to trigger the decline, however around 500 lots passed though Comex to see the metal print to a USD $962 low.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.