Stocks futures were pointing lower this morning, perhaps setting the stage for a day of modest losses for equities, as economic data in the U.S. has been cooling down of late. Jobless claims did come in below 300,000 for the sixth consecutive week, while the two main crude oil benchmarks are down 2% this morning following yesterday's rally. Meantime, the precious metals opened in the green as they look to build momentum from yesterday's gains, as well. Gold was trading around $1,205/oz while silver looked to inch back above $16.50/oz at 10 am ET.
Update: The metals may be in a store for a choppy day of trading, as each of the PMs (besides palladium) dipped into the red by mid-morning.
Yesterday in the Markets
Stocks rose modestly yesterday, with each U.S. index closing slightly in positive territory. This helped the Dow Industrials remain above 18,100, while the S&P 500 moved above 2,100, and the Nasdaq pushed above 5,000. Precious metals also gained, with silver adding about 1% and gold advancing $10 to move back near $1,200/oz. 10-year Treasuries remained parked, with yields just below 1.90%.
Factors Affecting Gold Today
The economic machinery in not only slowing down in the U.S., but across the Pacific in China as well. It is much the same case as the States, however: China will periodically come up with some encouraging economic indicators after a slew of disappointing data had been coming out in the preceding weeks. Of late, foreign direct investment into China grew by more than 2% in March, and increased by more than 11% over the first quarter. This helped pushed the Shanghai stock index up nearly 3% this morning as the Chinese stock market is beginning to overheat in a similar manner to its American counterpart.
Even with the U.S. and China providing mixed bags of data, the situation is actually even murkier in Europe. The European bond market is all over the place: short-term yields on government debt are either already negative or approaching negative territory across the continent. Meantime, even the stronger economies in the eurozone are seeing an overcrowding in their own long-term bond markets due to the relative safe haven compared to riskier debt in Italy, Spain, Portugal, and of course Greece. All of this uncertainty creates upward pressure for the precious metals.
Stalwart Germany's 10-year Bund yield has continued to fall, dropping from an already miniscule 0.11% down below 0.09% this morning. This does indicate, however, that there continues to be demand for German sovereign debt, even when it pays back next to nothing. Similarly, France's 30-year bond yield has slid below 1%, an incredibly low figure for such a long-term investment. The demand for low-yielding sovereign debt from the stronger European nations stands in direct contrast to, say, Greece, which just had its credit rating downgraded to CCC+ (with a negative outlook going forward) by Standard & Poor's.
CPI and consumer sentiment will be announced in the U.S., while CPI and retail sales come out in Canada. The early morning sees consumer price information from the EU, labor market indicators from Great Britain, and adjusted retail sales from Switzerland.