Category: Uncategorized

Published: 9/14/2023 5:39 AM ET

Gold prices were subdued on Thursday after U.S. consumer inflation data came in hotter than expected, keeping bets of more Fed rate hike alive.

Spot gold slipped 0.1 percent to $1,906.85 per ounce, while U.S. gold futures were down 0.3 percent at $1,927.70.

Data showed U.S. consumer prices increased 3.7 percent year-per-year last month, slightly ahead of the estimated 3.6 percent. Core inflation rose 4.3 percent, matching expectations.

Following the report, CME Group’s FedWatch Tool currently indicates a 97.0 percent chance the Federal Reserve will leave interest rates unchanged next week.

The outlook for November remains more mixed, with the FedWatch Tool indicating a 40.8 percent chance of another quarter point rate hike.

Trading later in the day may be impacted by reaction to the ECB rate decision as well as a slew of U.S. economic data, including reports on weekly jobless claims, retail sales and producer price inflation.

The European Central Bank is likely to raise interest rates for a 10th consecutive meeting but it’s a close call, given growing concerns about growth.

The central bank will update its forecasts for growth and inflation at today’s meeting.

Oil rebounded on Thursday as expectations of a tighter global crude supply outlook for the rest of 2023 overshadowed concerns over weaker economic growth and rising U.S. inventories.

Saudi Arabia and Russia’s extension of oil output cuts will result in a market deficit through the fourth quarter, the International Energy Agency said on Wednesday before a bearish U.S. inventories report prompted a slight pullback in prices.

“That this genuinely bearish stock report only led to a brief temptation to sell speaks volumes and underlines the market mentality,” said Tamas Varga of oil broker PVM.

The tightening oil balance will remain the dominant price driver for the rest of 2023, he added.

Brent crude rose 66 cents, or 0.7 per cent, to $92.54 a barrel by 1010 GMT. U.S. West Texas Intermediate crude (WTI) was up 62 cents, or 0.7 per cent, at $89.14.

Both benchmarks touched 10-month highs on Wednesday before release of the U.S. supply report showing rising crude and refined product stocks sent prices lower.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said supply fears are underpinning oil prices as producers “adamantly stick to restricted production”.

A day before the IEA report, the Organization of the Petroleum Exporting Countries (OPEC) issued updated forecasts of solid demand and also pointed to a 2023 supply deficit if production cuts are maintained.

“The oil market looks decidedly tight over the next two to three quarters as supply constraints persist amid robust demand,” ANZ Research analysts said.

In focus later on Thursday will be the latest interest rate decision from the European Central Bank.

Analyst and investor expectations had been leaning towards a pause in rate increases until Reuters reported on Tuesday that the ECB was set to raise its inflation forecast for next year to more than 3 per cent, bolstering the argument for higher interest rates.

• The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points from Sept. 15.
• The move came after the world’s second-biggest economy has struggled after its post-pandemic recovery faltered.

China’s central bank said on Thursday it would cut the amount of cash that banks must hold as reserves for the second time this year to help keep liquidity ample and support a nascent economic recovery.

The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points from Sept. 15.

The move came after the world’s second-biggest economy has struggled after its post-pandemic recovery faltered.

To support the economy, the government has rolled out a series of policy measures in recent months, including steps to spur housing demand.

This is a breaking news story, please check back later for more.

New England on alert: Hurricane and Tropical Storm watches issued for much of coastline ahead of Lee’s arrival (foxweather.com)

• The consumer price index rose 0.6% in August, its biggest monthly gain of 2023. The inflation gauge rose 3.7% from a year ago.
• Core CPI increased 0.3% and 4.3% respectively, against estimates for 0.2% and 4.3%. Fed officials focus more on core as it provides a better indication of where inflation is heading over the long term.
• Energy prices fed much of gain, rising 5.6% on the month, an increase that included a 10.6% surge in gasoline.
• The jump in headline inflation hit worker paychecks. Real average hourly earnings declined 0.5% for the month.

CPI report August 2023: Inflation rose 0.3% (cnbc.com)

• Patients taking diabetes and weight loss drugs say they’ve also noticed changes in their cravings for alcohol, nicotine, opioids and some compulsive behaviors, such as online shopping and gambling.
• These anecdotal reports add to the growing list of potential benefits of GLP-1s like Ozempic and Wegovy beyond shedding unwanted pounds.
• Several studies in animals back up those reports, but more research needs to be done in humans to prove that those treatments can curb addiction.

https://www.cnbc.com/2023/09/10/ozempic-wegovy-drinking-smoking-what-we-know.html

A deposit of lithium recently discovered along the Nevada-Oregon border may be among the world’s largest, having potentially huge implications for the transition to electric vehicles. 

Volcanologists and geologists from Lithium Americas Corporation, GNS Science, and Oregon State University reported their findings in a paper for Science Advances, published August 31. 

Lithium deposit found in US may be among world’s largest, study finds | Fox Business

• Global leaders announced a multinational rail and ports deal linking the Middle East and South Asia on Saturday on the sidelines of the G20 summit in New Delhi.
• The pact comes at a critical time as U.S. President Joe Biden seeks to counter China’s Belt and Road push on global infrastructure by pitching Washington as an alternative partner and investor for developing countries at the G20 grouping.

U.S., India, Saudi, EU unveil a massive rail, ports deal at G20 (cnbc.com)

Monday September 11

China’s aggregate yuan loans, new loans and money supply.

Japan machine tool orders

Earnings include: NanoXplore Inc.

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Tuesday September 12

Germany’s ZEW Survey

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for August.

Earnings include: Evertz Technologies Ltd.; Wall Financial Corp.; WildBrain Ltd.

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Wednesday September 13

Euro zone industrial production

(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q2.

(8:30 a.m. ET) U.S. CPI for August. The consensus on the Street is an increase of 0.6 per cent from July and up 3.6 per cent year-over-year.

(2 p.m. ET) U.S. budget balance for August.

Earnings include: Dollarama Inc.; North West Company Inc.

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Thursday September 14

Japan’s core machine orders and industrial production

ECB monetary policy announcement

(8:30 a.m. ET) Canadian wholesale trade for July. Estimate is a month-over-month increase of 1.4 per cent.

(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 9. Estimate is 225,000, up 9,000 from the previous week.

(8:30 a.m. ET) U.S. retail sales for August. The Street expects an increase of 0.2 per cent from July (or 0.4 per cent excluding automobiles).

(8:30 a.m. ET) U.S. PPI final demand for August. Consensus is a rise of 0.4 per cent from July and up 1.2 per cent year-over-year.

(10 a.m. ET) U.S. business inventories for July.

Earnings include: Adobe Inc.; Empire Company Ltd.; Oracle Corp.; Transat AT Inc.

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Friday September 15

China’s industrial production, retail sales and fixed asset investment.

Eurogroup meeting

(8:30 a.m. ET) Canadian manufacturing sales and new orders for July. Estimates are increases of 0.7 per cent and 0.8 per cent from June, respectively.

(8:30 a.m. ET) Canada’s international securities transactions for July.

(8:30 a.m. ET) Canada’s new motor vehicle sales for July. Estimate is a month-over-month increase of 8.0 per cent.

(8:30 a.m. ET) U.S. import prices for August. Consensus is a rise of 0.3 per cent from July and up 2.9 per cent year-over-year.

(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for September.

(9 a.m. ET) Canadian existing home sales and average prices for August. Estimates are year-over-year increases of 7.0 per cent and 2.0 per cent, respectively.

(9 a.m. ET) Canada’s MLS Home Price Index for August. Estimate is a rise of 1.0 per cent year-over-year.

(9:15 a.m. ET) U.S. industrial production for August. The Street expects a rise of 0.1 per cent from July with capacity utilization remaining 79.3 per cent.

(10 a.m. ET) U.S. University of Michigan consumer sentiment for September.