Daily summary: Rising yields pressure gold, Wall Street recovers from early declines

8:59 pm 25 September 2023

  • Rising yields were a theme of the day with 10-year US yield climbing above 4.50% to reach the highest level since 2007. German yields climbed above 2.80% and were are the highest level since 2011
  • Equity markets around the world were under pressure. European indices finished lower with German DAX dropping 1%, UK FTSE 100 and French CAC40 moving 0.8% lower and Spanish IBEX plunging 1.2%
  • Wall Street indices also launched today's trading lower but have managed to recover from early declines. S&P 500 and Nasdaq trade 0.2% higher, Russell 2000 gains 0.4% while Dow Jones trades 0.1% lower
  • Pick-up in yields supported USD which is among the best performing G10 currencies today. It is also putting pressure on precious metals with gold dropping 0.5% and silver plunging almost 2%
  • Energy commodities traded mixed today - oil dropped 0.4-0.6% while US natural gas prices increased 0.2%
  • Major cryptocurrencies traded mixed - Bitcoin dropped 0.7%, Dogecoin traded 0.2% lower, Ethereum gained 0.2% and Litecoin adding 0.5%
  • German IFO business climate index stayed unchanged at 85.7 in September (exp. 85.2). Expectations subindex moved from 82.6 to 82.9 (exp. 83.0) while the Current Situation subindex dropped from 89.0 to 88.7 (exp. 88.0)
  • Dallas Fed manufacturing index for September came in at -18.1, down from -17.2 for August and below -13.0 expected
  • Fed's Goolsbee said that risk of inflation staying too high is a bigger risk for now and that it is unusual for inflation to fall like it is now without unemployment rising. Goolsbee also said that rates will have to stay higher for longer than market expects
  • ECB Kazaks said that a rate hike in September may allow for a pause at October meeting
  • ECB Schnabel said that economic activity in Euro ara is clearly moderating and that inflation problem has not been solved yet
  • ECB President Lagarde said that recession is not part of baseline scenario and that ECB is not talking about rate cuts right now
  • HSBC lowered its Chinese GDP forecast for 2023 from 5.3 to 4.9%

Pick-up in bond yields is putting pressure on precious metals with GOLD slowly approaching $1,910 support zone. Source: xStation5

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