Fundamentals are mostly bullish
[U.S. initial jobless claims hit eight-month high last week]
The U.S. reported its highest number of jobless claims in eight months last week, signaling a cooling in the labor market amid rising interest rates and tightening financial conditions.
Initial jobless claims rose by 9,000 to a seasonally adjusted 244,000 for the week ended July 9, the highest level since mid-November 2021. Economists forecast 235,000. Initial jobless claims have hovered around 230,000 since June.
There have been reports of layoffs in interest-rate-sensitive real estate and manufacturing. Unadjusted claims for unemployment benefits rose by 21,384 to 241,314 last week.
[The two big hawks of the Fed said they hoped to raise interest rates three yards in July, and the market's bet on a 100-point rate hike fell in response]
Two of the Fed's most hawkish policymakers said on Thursday they were in favor of another 75 basis-point rate hike at this month's policy meeting, rather than the 100-point hike that traders raced to digest after Wednesday's report showing accelerating inflation .
[Draged by recession concerns, European stock markets continued to fall, and Italian stock markets fell 3.4% due to political reasons]
The pan-European STOXX 600 fell 1.5% on Thursday, dragged down by commodities and bank stocks, extending losses from Wednesday's 1% decline as bets on a more aggressive Fed rate hike added to recession fears; while Italy The main index tumbled 3.4 percent as the country's government faced collapse.
[EU downgrades euro zone growth forecast, raises inflation outlook]
The European Commission on Thursday cut its economic growth forecast for the euro zone this year and next, and raised its inflation estimate, mainly due to the impact of the war in Ukraine. In its quarterly forecast, the Executive Committee confirmed a more pessimistic outlook.
The executive committee now forecasts growth for the 19-nation euro zone at 2.6 percent this year, down slightly from its May forecast of 2.7 percent. But growth next year was cut to 1.4 percent from a previous forecast of 2.3 percent, as the effects of the war in Ukraine and rising energy prices are likely to be more severe.
For the EU-27, the growth forecast for this year is unchanged at 2.7%, but the growth rate for 2023 has been revised down from 2.3% to 1.5%.
The fundamentals are mainly bearish
[U.S. producer price inflation remains high fever]
The producer price index for final demand (PPI) climbed 1.1% in June after rising 0.9% in May, driven by a 10.0% jump in energy prices, which reflected higher gasoline, diesel, electricity and residential natural gas prices, the data showed.
[The U.S. dollar index continues to refresh nearly 20-year highs]
The U.S. dollar index continued to rise on Thursday, reaching a maximum of 109.30, a new high since September 2002, mainly boosted by expectations of a 100 basis point interest rate hike, and fell back to around 108.64 in late trading, as two Fed officials said they Favoring a 75 basis point rate hike at the July meeting reduced the likelihood of a more aggressive move.
[Federal Reserve Research Report: This round of quantitative tightening may lead to more-than-expected tightening]
Tight U.S. bond markets could complicate the central bank’s plans to shrink its balance sheet, as those shrinkages would magnify the impact on financial markets and lead to more-than-expected rate hikes, according to two new analyses by Fed staff.
On the whole, the prospect of interest rate hikes by the Federal Reserve and global central banks, and the quantitative tightening of the Federal Reserve will obviously increase the opportunity cost of holding gold, which will continue to suppress bullish confidence, and the strength of the dollar is expected to continue to suppress gold prices. Relatively slim, the price of gold will even face the risk of further testing in the short-term, and pay attention to the support near the low of 1690.61 in August 2021.
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