Decline in Jobless Claims Eases QE Hopes. Commodities Plunge

ONG Focus | Insights | Written by Oil N' Gold | Fri Oct 22 10 00:52 ET

Gold's correction from the peak of 1388.1 continued as a surprising drop in US jobless claims eased QE expectations and lifted the dollar. The benchmark contract for gold plummeted to a 2-week low of 1318.2 before settling at 1325.6, down -1.38%. Crude oil has traded with high volatility with price fluctuating between 80 and 84 over the past few weeks. The front-month contract yesterday slipped to as low as 80.09 before recovering to 80.56 at close, down -2.40%.

Initial jobless claims fell -23K to 425K in the week ended October 16. The unexpected drop brought the 4-week average lower to 458K. Meanwhile, Conference Board's leading indicator climbed +0.3% m/m in September and Philly Fed Index improved to 1 in October from -0.7 a month ago. Investors worries these data would prolong the debate among Fed members on QE implementations. St Louis Fed President James Bullard said he saw 'small increments' of QE2 at the November meeting but no decisions was made. This suggests policymakers have not yet reached a consensus to announce further measures at the meeting 2 weeks later. Bullard also expressed his view on QE and he favored starting the program by buying $100B in long-term Treasury in November. Subsequent purchases will be based on economic development. Yet, he added that not much effect will be seen for a November move as the market has priced it in and long-term yields have fallen significantly.

Kansas Fed President Thomas Hoenig will speak on the US economic outlook today. Hoenig has voted 6 times against leaving the Fed funds rate at exceptionally low level for an extended period of time.
Hoenig believed that the current high levels of unemployment were caused by 'an extended period of exceptionally low rates earlier in the decade that contributed to the housing bubble and subsequent collapse and recession'. Holding rates artificially low would 'invite the development of new imbalances and undermine long-run growth'. He favored 'moving the federal funds rate upward, consistent with his views at past meetings that it approach 1 percent, before pausing to determine what further policy actions were needed'. Hoenig also disfavored the reinvestment of agency debt and agency MBS proceeds.

Wall Street opened higher but gains were pared after the FHFA said Fannie & Freddie might need a total of $363B from the government through 2013 should the housing market deteriorates further. Banking shares were pressured and benchmark indices were dragged into the red before recovering in late US session. DJIA and S&P edged +0.35% and +0.18% respectively at close.

Commodities crawled higher in Asian session today. Sideways trading is expected ahead of the G-20 meeting as a potential currency war remains a key factor affecting the financial market. Over the past week, global leaders have tried to ease currency tensions between advanced and emerging economies. US Treasury Secretary Timothy Geithner said the world's major currencies are 'roughly in alignment' and the US is not trying to devaluate its currency. He said the US 'would like countries to move toward a set of norms on exchange-rate policy'. Olli Rehn, European Union Economic and Monetary Affairs Commissioner, said the goal of the meeting 'is to agree on a policy on the coordination and rebalancing of global growth'.

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here

Decline in Jobless Claims Eases QE Hopes. Commodities Plunge

ONG Focus | Insights | Written by Oil N' Gold | Fri Oct 22 10 00:52 ET

Gold's correction from the peak of 1388.1 continued as a surprising drop in US jobless claims eased QE expectations and lifted the dollar. The benchmark contract for gold plummeted to a 2-week low of 1318.2 before settling at 1325.6, down -1.38%. Crude oil has traded with high volatility with price fluctuating between 80 and 84 over the past few weeks. The front-month contract yesterday slipped to as low as 80.09 before recovering to 80.56 at close, down -2.40%.

Initial jobless claims fell -23K to 425K in the week ended October 16. The unexpected drop brought the 4-week average lower to 458K. Meanwhile, Conference Board's leading indicator climbed +0.3% m/m in September and Philly Fed Index improved to 1 in October from -0.7 a month ago. Investors worries these data would prolong the debate among Fed members on QE implementations. St Louis Fed President James Bullard said he saw 'small increments' of QE2 at the November meeting but no decisions was made. This suggests policymakers have not yet reached a consensus to announce further measures at the meeting 2 weeks later. Bullard also expressed his view on QE and he favored starting the program by buying $100B in long-term Treasury in November. Subsequent purchases will be based on economic development. Yet, he added that not much effect will be seen for a November move as the market has priced it in and long-term yields have fallen significantly.

Kansas Fed President Thomas Hoenig will speak on the US economic outlook today. Hoenig has voted 6 times against leaving the Fed funds rate at exceptionally low level for an extended period of time.
Hoenig believed that the current high levels of unemployment were caused by 'an extended period of exceptionally low rates earlier in the decade that contributed to the housing bubble and subsequent collapse and recession'. Holding rates artificially low would 'invite the development of new imbalances and undermine long-run growth'. He favored 'moving the federal funds rate upward, consistent with his views at past meetings that it approach 1 percent, before pausing to determine what further policy actions were needed'. Hoenig also disfavored the reinvestment of agency debt and agency MBS proceeds.

Wall Street opened higher but gains were pared after the FHFA said Fannie & Freddie might need a total of $363B from the government through 2013 should the housing market deteriorates further. Banking shares were pressured and benchmark indices were dragged into the red before recovering in late US session. DJIA and S&P edged +0.35% and +0.18% respectively at close.

Commodities crawled higher in Asian session today. Sideways trading is expected ahead of the G-20 meeting as a potential currency war remains a key factor affecting the financial market. Over the past week, global leaders have tried to ease currency tensions between advanced and emerging economies. US Treasury Secretary Timothy Geithner said the world's major currencies are 'roughly in alignment' and the US is not trying to devaluate its currency. He said the US 'would like countries to move toward a set of norms on exchange-rate policy'. Olli Rehn, European Union Economic and Monetary Affairs Commissioner, said the goal of the meeting 'is to agree on a policy on the coordination and rebalancing of global growth'.

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here

Commodities Rally as Weak Housing Market Sustains QE Hopes. China Lifts Fuel Prices

ONG Focus | Insights | Written by Oil N' Gold | Tue Oct 26 10 00:05 ET

The market focus has quickly shifted from the G-20 meeting to Fed's return to QE again. As the November meeting approaches, investors become more sensitive to comments from officials and dataflow. Commodities strengthened yesterday as the dollar weakened. The front-month contract for WTI crude oil surged to a 1-week high of 83.28 before settling at 82.52, up +1.02%, while that for gasoline and heating oil also climbed modestly. Precious metals rallied. While gold, silver and platinum soared more than +1% to settle at 1338.9, 23.54 and 1697 respectively, PGMs jumped to a 9-year high of 620 before closing at 608.8, up +2.99%.

US' housing market was under the spotlight yesterday. Existing home sales rose +10% m/m to 4.53M in September, following a +7.3% increase in August and beating market forecast of 4.3M. While the stronger-than-expected reading signals the post-tax credit effect is moderating, the level of sales remains low.

Spoke at a housing conference, Fed Chairman Ben Bernanke said that housing markets remain weak and 'high levels of mortgage distress may well persist for some time'. At the same time, Bernanke stressed the government is 'looking intensively at the firms' policies, procedures, and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures' with preliminary results of the review coming probably next month. Bernanke did not talk about monetary policy yesterday but the market easily related dismal housing markets to further easing measures.

Weakness in USD and speculations for Fed's return to QE has lifted commodity prices. WTI crude oil price has rallied more than +10% since June. Yet, refiners in China, with the biggest ones being Sinopec and Petrochina might not benefit from the increase. Rather, many of them suffered as fuel prices are under Government controls.

The NDRC yesterday announced to increase retail gasoline and diesel prices by +3%, the first adjustment since June and the first hike since April. Since the new mechanism – price adjustment will be made should international oil benchmarks fluctuate by more than 4% over 22 working days- was introduced in December 2008, only 12 adjustments were made. The moves were not enough to relieve Chinese refiners from margin squeeze as international oil prices have rallied significantly during the period.

Xinhua news agency reported that the NDRC will release a 'more transparent' oil product pricing mechanism by the end of this year. It's expected, under the new mechanism, fuel prices will be adjusted when international oil prices change 2% in 10 working days. The move would be positive to refiners as domestic fuel prices will move more coherently with international prices.

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here

Decline in Jobless Claims Eases QE Hopes. Commodities Plunge

ONG Focus | Insights | Written by Oil N' Gold | Fri Oct 22 10 00:52 ET

Gold's correction from the peak of 1388.1 continued as a surprising drop in US jobless claims eased QE expectations and lifted the dollar. The benchmark contract for gold plummeted to a 2-week low of 1318.2 before settling at 1325.6, down -1.38%. Crude oil has traded with high volatility with price fluctuating between 80 and 84 over the past few weeks. The front-month contract yesterday slipped to as low as 80.09 before recovering to 80.56 at close, down -2.40%.

Initial jobless claims fell -23K to 425K in the week ended October 16. The unexpected drop brought the 4-week average lower to 458K. Meanwhile, Conference Board's leading indicator climbed +0.3% m/m in September and Philly Fed Index improved to 1 in October from -0.7 a month ago. Investors worries these data would prolong the debate among Fed members on QE implementations. St Louis Fed President James Bullard said he saw 'small increments' of QE2 at the November meeting but no decisions was made. This suggests policymakers have not yet reached a consensus to announce further measures at the meeting 2 weeks later. Bullard also expressed his view on QE and he favored starting the program by buying $100B in long-term Treasury in November. Subsequent purchases will be based on economic development. Yet, he added that not much effect will be seen for a November move as the market has priced it in and long-term yields have fallen significantly.

Kansas Fed President Thomas Hoenig will speak on the US economic outlook today. Hoenig has voted 6 times against leaving the Fed funds rate at exceptionally low level for an extended period of time.
Hoenig believed that the current high levels of unemployment were caused by 'an extended period of exceptionally low rates earlier in the decade that contributed to the housing bubble and subsequent collapse and recession'. Holding rates artificially low would 'invite the development of new imbalances and undermine long-run growth'. He favored 'moving the federal funds rate upward, consistent with his views at past meetings that it approach 1 percent, before pausing to determine what further policy actions were needed'. Hoenig also disfavored the reinvestment of agency debt and agency MBS proceeds.

Wall Street opened higher but gains were pared after the FHFA said Fannie & Freddie might need a total of $363B from the government through 2013 should the housing market deteriorates further. Banking shares were pressured and benchmark indices were dragged into the red before recovering in late US session. DJIA and S&P edged +0.35% and +0.18% respectively at close.

Commodities crawled higher in Asian session today. Sideways trading is expected ahead of the G-20 meeting as a potential currency war remains a key factor affecting the financial market. Over the past week, global leaders have tried to ease currency tensions between advanced and emerging economies. US Treasury Secretary Timothy Geithner said the world's major currencies are 'roughly in alignment' and the US is not trying to devaluate its currency. He said the US 'would like countries to move toward a set of norms on exchange-rate policy'. Olli Rehn, European Union Economic and Monetary Affairs Commissioner, said the goal of the meeting 'is to agree on a policy on the coordination and rebalancing of global growth'.

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here

Commodities Rally as Weak Housing Market Sustains QE Hopes. China Lifts Fuel Prices

ONG Focus | Insights | Written by Oil N' Gold | Tue Oct 26 10 00:05 ET

The market focus has quickly shifted from the G-20 meeting to Fed's return to QE again. As the November meeting approaches, investors become more sensitive to comments from officials and dataflow. Commodities strengthened yesterday as the dollar weakened. The front-month contract for WTI crude oil surged to a 1-week high of 83.28 before settling at 82.52, up +1.02%, while that for gasoline and heating oil also climbed modestly. Precious metals rallied. While gold, silver and platinum soared more than +1% to settle at 1338.9, 23.54 and 1697 respectively, PGMs jumped to a 9-year high of 620 before closing at 608.8, up +2.99%.

US' housing market was under the spotlight yesterday. Existing home sales rose +10% m/m to 4.53M in September, following a +7.3% increase in August and beating market forecast of 4.3M. While the stronger-than-expected reading signals the post-tax credit effect is moderating, the level of sales remains low.

Spoke at a housing conference, Fed Chairman Ben Bernanke said that housing markets remain weak and 'high levels of mortgage distress may well persist for some time'. At the same time, Bernanke stressed the government is 'looking intensively at the firms' policies, procedures, and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures' with preliminary results of the review coming probably next month. Bernanke did not talk about monetary policy yesterday but the market easily related dismal housing markets to further easing measures.

Weakness in USD and speculations for Fed's return to QE has lifted commodity prices. WTI crude oil price has rallied more than +10% since June. Yet, refiners in China, with the biggest ones being Sinopec and Petrochina might not benefit from the increase. Rather, many of them suffered as fuel prices are under Government controls.

The NDRC yesterday announced to increase retail gasoline and diesel prices by +3%, the first adjustment since June and the first hike since April. Since the new mechanism – price adjustment will be made should international oil benchmarks fluctuate by more than 4% over 22 working days- was introduced in December 2008, only 12 adjustments were made. The moves were not enough to relieve Chinese refiners from margin squeeze as international oil prices have rallied significantly during the period.

Xinhua news agency reported that the NDRC will release a 'more transparent' oil product pricing mechanism by the end of this year. It's expected, under the new mechanism, fuel prices will be adjusted when international oil prices change 2% in 10 working days. The move would be positive to refiners as domestic fuel prices will move more coherently with international prices.

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here