Daily digest market movers: Gold holds to modest gains as US yields rise
- On Monday, the US economic docket will featured housing data on the first two days of the week. Data from the National Association of Home Builders (NAHB) revealed that homebuilders' confidence rose in March to its highest level since July 2023, as mortgage rates dip, on expectations that the Fed might begin to ease policy. The NAHB Market Index came at 51, up from 48 in February.
- The US 10-year Treasury bond yield climbs two and a half basis points, up at 4.334%.
- The latest US economic data witnessed mixed readings in business activity, making it challenging to predict the pace of the economic deceleration in the US. The labor market has shown signs of cooling, though the economy added more people to the workforce than expected while fewer people applied for unemployment benefits.
- Given the backdrop, Fed Chairman Jerome Powell’s words in his testimony at the US Congress, suggesting that they would begin to cut borrowing costs, were justified. However, last week’s inflation figures and retail sales data triggered a repricing of Fed rate cut bets, aligning with the US central bank's view of 75 basis points of easing toward the end of 2024.
- The Fed’s next meeting is scheduled for March 19-20 next week. Given the latest inflation data, speculation is growing that Fed officials could eliminate one rate cut towards the end of the year, signaling they could cut rates twice in 2024.
- According to the CME FedWatch Tool, expectations for a June rate cut stand at 58%, down from 72% a week ago.
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