Spot gold continued to hold firm above support Wednesday, trading at $1,296/oz.
Global markets will likely resist any big moves until after the Fed wraps up its June meeting this afternoon.
Silver extended its rally. Spot silver was up 9¢ (+0.55%) to $16.93/oz.
Palladium slipped by $11 (-1.1%) to just barely above $1,000/oz, cutting short a rally of its own.
Meanwhile, platinum opened mostly flat but was stuck below $900/oz.
Markets Await FOMC Decision
The two-day meeting of the Federal Reserve Open Market Committee (FOMC) concludes at 2 pm EST today. Investors and traders are almost unanimously expecting the Fed to raise interest rates.
However, the central bank could rattle markets if it continues to raise rates while the U.S. deficit is so large. This would also result in higher interest payments on that debt.
According to the Treasury Department, the government's budget deficit was up to $147 billion last month. That's a 66% increase year-on-year.
The Treasury will likely need to issue more debt to cover the gap.
10-year bond yields were down one basis point to 2.95% this morning.
Aside from the FOMC, the other big news Wednesday was the release of May's reading of the producer price index (PPI), which is considered a gauge of wholesale price inflation.
According to the Department of Labor, PPI was up 0.5% in May and rose 3.1% year-on-year, notching a six-year high.
The data was buoyed by a 10% increase in gas prices during the month.
Wall St opened mostly unchanged in response. Trade concerns and the diplomatic tango with North Korea are expected to take a back seat to the Fed and other central bank decisions later this week.
Value stocks seem to be benefiting from the trade turmoil more than the top of the market. The Russell 2000 index of small-cap stocks has risen for six straight weeks.
Telecoms Could See M&A Flurry
Across the Atlantic, stock indices added about 0.2% in Europe and 0.35% in London.
Asian markets were mixed overnight. Equities in Japan closed 0.4% higher but shares fell as much as 1.0% in Shanghai and Hong Kong.
In a case with major implications for the broader industry, a court approved AT&T's pending acquisition of Time Warner for $85 billion. The decision came despite strong pushback from the Trump administration against the vertical merger on antitrust grounds.
The judge's approbation of the deal could open up more M&A activity among other big telecommunication companies. Disney and Comcast are currently at odds over which firm will buy out Fox's media assets.
Like stocks and bonds, currencies also saw light trading ahead of the Fed announcement. The dollar dipped slightly on the DXY index to 93.7.
This pushed the euro up by 0.2% to $1.177, but forex trading was mostly subdued otherwise.
Despite experiencing upward pressure from the expectation of higher interest rates, the USD is still facing headwinds from global trade conflicts.
After the spread between WTI crude and Brent crude narrowed on Tuesday, the two oil benchmarks were diverging again during Wednesday's session.
Brent was flat at $75.85/bbl but WTI lost 0.5% (-32¢) to return to $66/bbl. The Shanghai crude price dipped slightly to $72.53/bbl.
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