Private: Gold lower at 1249.58 (-9.44). Silver 15.95 (+0.032). Dollar bounces. Euro lower. Stocks called higher. US 10yr 1.89% (-1 bp).
Private: U.S. Mint gold and silver bullion coin sales
Sales of U.S. Mint gold and silver bullion coin sales serve as a bellwether for market sales internationally. Thus far this year gold bullion coin sales are running double 2015 to mid-March. Silver bullion coin sales are running about 30% higher over the same period. Volumes in both areas are very strong over previous periods historically.
Overall gold and silver bullion coin sales ratcheted to much higher levels following the 2007-2008 financial crisis and stayed there. Sales in silver bullion coins have been consistently strong reflecting the change in public perception toward the metal. Silver is now viewed by many alongside gold as a monetary vehicle for long-term asset preservation.
Please visit here (gold) and here (silver) to see results for years 2002-2014. Some of the mints have yet to report 2015 sales. We will update the charts once the data from all the mints becomes available.
If you have an interest in gold and silver bullion coins, we invite your call at our
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Private: The Daily Market Report: Gold Rebounds on More Dovish Than Expected Fed
17-Mar (USAGOLD) — Gold remains well bid within the recent range, underpinned by yesterday’s more dovish than expected FOMC statement. While the 1284.53 high from last week remains intact, yesterday’s gains and the follow through seen earlier today, keeps focus on the upside.
The Fed held steady on policy and halved their forecasted number of 2016 rate hikes from 4 to 2, prompting traders that pared long gold exposure going into the Fed meeting to pile back into the trade. Many were expecting the central bank to note heightened inflation risk, setting the table for a probable June hike. However, the Fed doesn’t seem concerned about inflation at all, and we ended up with the most dovish statement we’ve seen in quite some time.
The Fed also cut growth and inflation expectations for both this year and next. That adds additional credence to the notion that the December rate hike — the first in nearly a decade — was a mistake.
Fed funds futures have pretty much taken an April hike off the table, showing the probability at just 7%; even though Janet Yellen says it remains a “live meeting” where they could raise rates. The potential of a June hike plunged to 42% and September fell to 57%.
The BoE held steady on rates today, leaving the repo rate at a record low 0.5%, where it has been for seven-years now! The SNB left the deposit rate steady at -0.75%, but continues to maintain that the franc remains overvalued. The Norges Bank cut its policy rate by 25 bps to 0.5% and indicated that the rate “may be reduced further in the course of the year.”
Not everyone is cutting though: South Africa’s Reserve Bank hiked its repo rate by 25 basis points today to 7.0% as it continues to fight stagflation. This is hardly cause for celebration or indicative of any shift in the broader trend toward über-accommodative policy.
Today’s release of U.S. current account data further highlights the conundrum the Fed will face even if inflation were to pick up, and that’s the detrimental impact of the strong dollar. While the current account deficit narrowed modestly in Q4, versus Q3, it has widened a whopping 24.3% to $484.1 bln from Q4-2014.
The bottom line is that the relative strength of the dollar is killing U.S. exporters. And the dollar has risen primarily on the back of tighter Fed policy, beginning with the taper and culminating with the December rate hike. At the same time this was going on, many other central banks were going in the exact opposite direction, creating a huge policy divergence.
Further Fed tightening from here would push the dollar even higher, and potentially tip the U.S. economy toward recession. The Fed itself now says we should expect 2 rate hikes this year . . . I’d put that number closer to zero.
Private: U.S. 2015 trade deficit highest in seven years
17-Mar (Portland Press Herald) — The deficit in the broadest measure of U.S. trade declined slightly in the final three months of 2015, but for the entire year the deficit jumped to the highest level in seven years.
The Commerce Department says the deficit in the current account narrowed to $125.3 billion in the fourth quarter, down 3.6 percent from a deficit of $129.9 billion in the third quarter.
The deficit for the entire year rose to $484.1 billion, up 24.3 percent from a 2014 imbalance of $389.5 billion. It was the biggest annual deficit since 2008 when the deficit totaled $690.8 billion.
The big deterioration reflected the struggles U.S. companies are having as weakness in major economies overseas and a stronger dollar have sharply reduced export sales.
[source]
PG View: The relative strength of the dollar is killing U.S. exporters. The Fed is really going to have a problem if they continue to foster policy divergence.
Private: Silver traded above $16 for the first time in nearly 5-months.
Private: U.S. leading indicators +0.1% in Feb, below expectations of +0.2%, vs -0.2% in Jan.
Private: U.S. JOLTS job openings +260k in Jan to 5,541k, near median of 5,500k, vs negative revised 5,281k in Dec.
Private: Gold climbs as Fed cuts outlook for interest rate rises
17-Mar (Reuters) — Gold climbed on Thursday, extending a 2.5 percent rally made in the previous session after the Federal Reserve cut the number of interest rate rises it forecasts for this year, sending the dollar sharply lower.
The U.S. central bank held interest rates steady and indicated that it would tighten policy this year, but fresh projections showed policymakers expect two quarter-point increases by year-end, half the number forecast in December.
…Gold has climbed nearly 20 percent since the end of last year as investors scaled back their expectations that the Fed would continue to push rates higher after December’s first increase in nearly a decade.
…”The Fed projections may only be conforming to what many in the market already assumed. This could limit further gold gains. That said, the dovish tilt in the Fed’s policy statement should be enough to reaffirm and galvanise the gold rally.”
[source]
Private: Norges Bank cut policy rate by 25 bps to 0.5% as was expected, “may be reduced further in the course of the year” according to statement.
Private: SNB holds deposit rate steady at -0.75%, in line with expectations, maintains that the franc remains overvalued.
Private: BoE held steady on policy, in line with expectations. Repo rate has been at record low 0.5% for 7-years now.
Private: U.S. Philly Fed index rebounded to 12.4 in Mar, well above expectations of -1.1, vs -2.8 in Feb.
Private: U.S. Q4 current account gap narrowed to -$125.3 bln, outside expectations of -$116.3 bln, vs revised -$129.9 bln in Q3 (was -$124.1 bln).
Private: U.S. initial jobless claims +7k to 265k for the week ended 12-Mar, in line with expectations.
Private: Gold higher at 1266.00 (+7.13). Silver 15.68 (+0.101). Dollar lower. Euro higher. Stocks called lower. US 10yr 1.87% (-4 bps).
Private: The Fed under Yellen and the gold trade
16-Mar (CNBC) — Gold, which has been on a remarkable run so far in 2016, pulled back this week before the Fed statement, and then did an about-face.
Jitters ahead of the Wednesday statement from the Federal Reserve Open Market Committee likely sent some investors who have been lucky enough to be in on gold trade early this year to take some profits. Although no changes to rates were expected, many investors and traders were treating the Fed like a wildcard to which the market as a whole might overreact. And with a 16-percent plus run up in gold so far in 2016, why take short-term chances? In this instance, they could have. The market overreacted in a way opposite to what some gold traders were expecting.
On Wednesday afternoon in trading immediately after the Fed statement — in which it left rates unchanged and said it expected only two rate hikes this year, not four — gold and the stock market moved higher, while the dollar declined.
[source]
PG View: Gold is making new highs into the U.S. close, poised to notch a $30+ gain on the day.
Private: Fed ‘Fiddling’ While the Economy Burns: Stephen Roach
16-Mar (Bloomberg) — Yale University Senior Fellow Stephen Roach discusses the Federal Reserve’s attempts to boost the U.S. economy through monetary policy and what steps can be taken to rebuild economic growth.
[video]
Private: Fed Leaves Interest Rates Unchanged, Lowers Outlook for Further Increases
16-Mar (WSJ) — Federal Reserve officials reduced estimates of how much they expect to raise short-term interest rates in 2016 and beyond, nodding to lingering risks to the economic outlook posed by soft global growth and financial-market volatility.
New projections show officials expect the federal-funds rate to creep up to 0.875% by the end of 2016, according to the median projection of 17 officials. That would mean two interest-rate increases this year, compared with four projected increases when officials met in December, and implies the Fed is tentatively looking at June for its next rate increase.
For now, the Fed is keeping its benchmark lending rate steady between 0.25% and 0.50%, after raising it a quarter percentage point in December. Without committing to a timetable, officials said the next move would depend on “realized and expected economic conditions” and reiterated that it plans to move gradually.
…However, in a closely watched section of its policy statement, it added that market developments and the global outlook “continue to pose risks.” This risk assessment is important because it indicates whether the Fed is leaning toward raising rates, holding them steady or reducing them.
In January, officials declined to make an assessment of risks to the economy, a sign of their uncertainty about the impact of slow global growth and volatile financial markets. The latest statement on risks suggests officials are inclined to wait until they have a clearer picture of the outlook before moving. That makes an April move a high hurdle, though not impossible.
[source]
Private: FOMC Statement
Release Date: March 16, 2016
For release at 2:00 p.m. EDT
Information received since the Federal Open Market Committee met in January suggests that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation picked up in recent months; however, it continued to run below the Committee’s 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. However, global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to monitor inflation developments closely.
Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.
[source]