Daily digest market movers: Gold rises on risk-off mood despite hawkish Fed commentary
- Gold remained underpinned during the week by the geopolitical risks linked to the Middle East conflict following Iran’s attack on Israel. The non-yielding metal is on its way to registering more than 2.25% weekly gains.
- The10-year Treasury benchmark rate is up 8 basis points in the week at 4.615%. US real yields are also up 8 bps and will likely end the week near 2.215%.
- Data during the week: Strong US Retail Sales were the first piece of data to spark a repricing of interest rates set by the Fed. Consequently, the US 10-year note yield peaked at 4.696%, a level last seen in November 2023.
- Firm Industrial Production data for March and solid jobs data, with Initial Jobless Claims lower than expected, overshadowed the housing market's sudden weakness.
- Atlanta Fed’s Raphael Bostic noted that inflation is too high, and the US central bank still has a way to go to tame it. He added that the Fed won’t be able to reduce rates. Earlier, New York Fed President John Williams stated that the Fed is data-dependent and emphasized that monetary policy is in a good place, so he wasn’t in a rush to cut rates. His baseline doesn’t consider hiking rates but added that the Fed will hike if needed.
- CME FedWatch Tool shows that the first-rate cut could happen in September, with odds for a quarter percentage point cut at 67%, up from Thursday’s 66%.
- US Dollar Index (DXY), which tracks the buck’s performance against a basket of six other currencies, loses 0.05% to 106.15.
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