Precious metals news

Alvin Tan, head of Asia FX strategy at RBC Capital Markets and the top currency forecaster, predicts the yen could weaken to 165 per dollar, a level last seen in 1986. Despite Japan's potential interventions to support its currency, the significant interest rate gap between Japan and the U.S. continues to drive the yen's decline. Tan suggests that effective intervention would require coordination with the U.S., as the currency is expected to breach the 160 level and possibly reach 165 amid sustained bearish sentiment.

The Brookings Institute explores the complexities of measuring real pay, which adjusts nominal earnings for inflation. Given the variety of pay and inflation metrics used, determining trends in real pay can yield differing results. Our interactive tool allows users to select any starting quarter and compare annualized changes in real pay to the most recent data, using four different pay measures and two inflation indices. By interacting with the data, users can see how real pay has shifted over selected periods, helping clarify the relationship between wages and the cost of living.

In April, U.S. job growth fell short of expectations with only 175,000 jobs added, compared to the forecasted 240,000, while the unemployment rate rose to 3.9%, marking a deviation from the recent trend of robust employment gains. This shift could influence the Federal Reserve’s strategy on interest rate adjustments. Additionally, average hourly earnings increased by only 0.2% month-over-month and 3.9% year-over-year, figures that were also below expectations, suggesting subdued inflationary pressures. The broader labor market indicators, such as the more comprehensive unemployment rate and labor force participation, also reflected some softening, with the former reaching its highest level since November 2021 at 7.4%.

In a bold move to stabilize its currency, Japan is believed to have spent approximately ¥9 trillion ($59 billion) on market interventions over just four days, a move that traders and authorities have not officially confirmed. Despite these significant financial efforts, there are growing concerns among economists, traders, and businesses about the broader economic impact, as Japan's ageing and shrinking population continues to grapple with the after-effects of decades-long deflation. This large-scale intervention underscores the severe challenges the Japanese economy faces, and it may not prevent consumers from curbing their spending.

Recent interventions by Japanese officials to stabilize the yen have unsettled one of this year's most profitable financial strategies—carry trades. Typically, investors borrow yen due to its low yield and invest in higher-yielding emerging-market currencies. However, a spike in yen volatility to its highest level since July has led to losses this week, particularly affecting investments in the Indian rupee and Colombian peso. Data indicates that the carry-to-risk ratio for these yen-funded investments has dropped significantly from March peaks, suggesting a decrease in the strategy's attractiveness due to increased currency risk.

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Joel and JD unravel the shocking economic turmoil of the week, spotlighting the catastrophic collapse of Republic First Bank, alarming jobs data, and Powell's foreboding speech. With the Fed confessing anxiety about inflation and pulling rate cuts off the path, it's now clear: we're in dangerous territory with no guard rails in sight!

The analysis below covers the Employment picture released on the first Friday of every month. While most of the attention goes to the headline number, it can be helpful to look at the details, revisions, and other reports to get a better gauge of what is really going on.

You would be surprised how much we can learn from U.S. shale gas fields that peaked years ago.  By taking this information and correlating it to the total U.S. Shale Gas Supply, we can provide a pretty good estimate of when peak production will occur...

The long-anticipated consumer pullback in spending is now evident in the restaurant industry, with notable chains like Starbucks, KFC, and McDonald’s experiencing declines in same-store sales. Starbucks saw a significant 17% drop in share prices following a surprising sales dip, attributed partially to adverse weather. Similarly, Yum Brands cited January snowstorms and challenging year-over-year comparisons for underwhelming performance across its brands, including Pizza Hut and Taco Bell.

We'll also take you back 91 years to reflect on Executive Order 6102 — one of the most highly controversial pieces of legislation in American history.

The Biden administration has announced the forgiveness of $6.1 billion in student debt for 317,000 former students of The Art Institutes, following the chain's closure last fall amid fraud allegations. This move is part of President Biden's broader strategy to address the nation's $1.7 trillion student debt, especially after broader relief efforts were hindered by the Supreme Court last year. The Art Institutes were accused of misrepresenting employment rates and salary data, leaving many graduates with significant debt and few tangible benefits, according to U.S. Secretary of Education Miguel Cardona.

During a recent conference, Federal Reserve Chair Jerome Powell dismissed concerns about stagflation, referencing historical contexts where stagflation involved much harsher economic conditions than those seen today. Despite a GDP growth report of 1.6% and a core PCE price index increase of 3.7%, Powell cited current solid growth and inflation under 3% as evidence against imminent stagflation. However, given Powell's previous misjudgments on economic trends, including a missed prediction on post-pandemic inflation spikes, UBS has developed strategies in case his current assessments prove incorrect again.

The number of new unemployment claims last week stayed low, indicating a strong economic support into the second quarter. Despite a near halt in worker productivity growth in the first quarter, economists dismissed concerns, attributing the slowdown to seasonal patterns and affirming the overall solid productivity trend.

Gold prices declined on Thursday as investors reevaluated the likelihood of U.S. interest rate cuts after the Federal Reserve indicated that inflation progress has stalled, suggesting higher interest rates may persist longer. Despite a brief surge in gold prices following a dip in the dollar and Treasury yields, the gains were short-lived. The Fed’s recent decision to maintain steady interest rates, coupled with cautious remarks about potential rate cuts, reflects ongoing concerns about inflation. Analyst Ross Norman noted that while delayed rate cuts are generally seen as negative for gold, the market's fluctuations offer temporary relief.

Federal Reserve Chair Jerome Powell emphasized the potential for declining inflation while maintaining a cautious tone on interest rates, acknowledging them as restrictive. Despite Powell's optimism, recent disappointing inflation and wage data have shifted investor focus from the Federal Reserve's forecasts to actual economic trends. Powell asserts his views, but as Neil Dutta from Renaissance Macro Research notes, it is the concrete inflation figures that will ultimately guide the Fed's actions. Meanwhile, the Fed's latest policy statement hints at a potential rate cut, though former advisor William English suggests that persistently high inflation could lead to a reversal of this stance, increasing the likelihood of rate hikes.

Join Alan Hubbard in today’s update on the massive increase in Chinese gold trading activity.

California’s government bet that they knew better than the free market. And now millions are paying the price.
The story begins in 1919, when the city of Berkley, California instituted legislation setting aside districts that would only allow the construction of single-family housing. The idea spread, and soon much of California’s urban areas had adopted the zoning policy. Today, approximately 40% of the total land in Los Angeles is set aside for single-family homes, while only 11% is reserved for multi-family residences. 

Hundreds of small and regional banks in the U.S. are under financial stress, with 282 facing significant risks from commercial real estate loans and the effects of higher interest rates, according to a study by Klaros Group. While these banks, predominantly holding less than $10 billion in assets, are not nearing insolvency, their strained financial conditions could lead to a reduction in investments like new branches and technology, potentially impacting communities and limiting direct services to customers. Fitch Ratings' Christopher Wolfe and Klaros Group's Brian Graham emphasize that the risk is more about financial pressure than outright failures.

Gold prices saw a modest recovery on Wednesday, climbing 0.9% to $2,306.80 per ounce, after the Federal Reserve opted to maintain its benchmark interest rate, which led to a slight retreat in both the dollar and U.S. Treasury yields. The unchanged rate and a weaker dollar made gold more attractive to investors using other currencies, contributing to the day’s gains. This rebound follows a recent dip in gold prices, influenced by diminished Middle East tensions and reduced expectations for early U.S. rate cuts, despite gold reaching a record high earlier in April due to robust demand from central banks and Chinese investors.