U.S. Banking Turmoil Worries Reappear as Gold Ushers in Second Month of Gains: Financial Breakfast on April 29

On Saturday (April 29), Beijing time, the dollar rose on Friday after data showed that U.S. inflation rose in March, though at a slower pace, keeping the Fed firmly on track to raise interest rates next week; gold rebounded , as falling yields and renewed concerns about turmoil in the U.S. banking sector gave the safe asset its second monthly gain even as steady U.S. inflation strengthened bets for a rate hike next week.

Commodity closing situation:U.S. gold futures settled flat at $1,999.10. June Brent crude futures rose 1.5% to settle at $79.54 a barrel, while the more actively traded July contract jumped 2.7% to settle at $80.33. U.S. crude futures rose 2.7 percent to close at $76.78.

U.S. stocks closed:The Dow Jones Industrial Average rose 0.8% to 34,098.16, the S&P 500 .SPX rose 0.83% to 4,169.48 and the Nasdaq rose 0.69% to 12,226.58.

precious metal

Gold rallied on Friday as falling yields and renewed worries about turmoil in the U.S. banking sector gave the safe asset its second monthly gain even as steady U.S. inflation strengthened bets for a rate hike next week .

The Fed delivered a detailed and scathing review of its failure to spot problems and push for a fix before the Silicon Valley bank collapsed, promising stronger oversight and tougher rules.

The Fed’s report coincided with a drop in 10-year yields, turning gold higher, “but it all depends on what (Fed Chairman Powell) says next week,” said Daniel Pavilonis, senior market strategist at RJO Futures, an indicator of 10 Yields on U.S. Treasury notes fell after data showed the pace of headline inflation slowed in March and consumer spending held steady. But the data also suggested that core inflationary pressures remained strong, prompting traders to increase bets on a rate hike next week.

Gold climbed to a one-year peak of $2,048.71 in mid-April as the banking crisis unfolded.

Silver was steady at $24.95 an ounce, platinum was flat at $1,077.04 and palladium rose 0.1 percent to $1,496.47, all on track for a second straight monthly gain.

Oil prices mostly rose more than 2% on Friday after strong earnings from energy companies, with U.S. data showing crude output falling while fuel demand rose.

But both Brent and WTI futures fell for a second week in a row, with Brent posting a fourth straight monthly decline, as disappointing U.S. economic data and uncertainty over interest rates weighed on the outlook for demand.

“Markets have been down for much of the week on fears of a looming recession and the widening of the First Republic crisis, however, today’s news that problems at First Republic may There are solutions and there are data showing oil demand is up and production is down,” Flynn said.

U.S. officials are coordinating emergency talks to rescue First Republic Bank after private discussions led by advisers to the bank have yet to reach a deal, according to three sources familiar with the situation.

U.S. crude oil production fell to 12.483 million bpd in February, the lowest since December 2022, data from the U.S. Energy Information Administration (EIA) showed on Friday. U.S. crude and product supplies, which signal demand, rose to 19.997 million bpd, the highest since November 2022.

Crude oil prices have declined in recent weeks and months amid concerns that higher interest rates could reduce demand.

Brent crude is down about 3% this week after falling about 5% last week, while U.S. crude futures are down about 1% for the week after falling about 6% last week.

For the month, Brent has slipped less than 1 percent, while U.S. crude has gained about 1 percent. It was the first monthly rise in U.S. crude oil prices in six months.

U.S. consumer spending was flat in March as a rise in spending on services was offset by a drop in spending on goods, but core inflationary pressures remained strong and the Federal Reserve is expected to raise interest rates again next week.

foreign exchange

The dollar rose on Friday after data showed that U.S. inflation rose in March, albeit at a slower pace, keeping the Federal Reserve firmly on track to raise interest rates next week.

The yen, meanwhile, fell across the board after the Bank of Japan, as expected, said it would keep interest rates ultra-low and unanimously decided not to make changes to its yield curve control (YCC) policy.

The yen slumped to its weakest against the euro since September 2008 and its weakest against the dollar in seven weeks. EUR/JPY was last up 1.5% at 150. For the week, the euro rose 1.8 percent against the yen.

USD/JPY, on the other hand, was last up 1.7% at 136.235, putting it up 1.6% for the week, its best week since late February.

The U.S. dollar index , which measures the greenback’s value against six major currencies, rose 0.2% to 101.65.

Data on Friday showed that the personal consumption expenditures (PCE) price index rose 0.1% in March after rising 0.3% in February. In the 12 months through March, the PCE price index rose 4.2 percent after climbing 5.1 percent in February.

Excluding the volatile food and energy components, core PCE prices rose 0.3%, the same pace as in February. The so-called core PCE price index rose 4.7% in March from a year earlier. 4.6%. The Fed tracks the PCE price index to achieve its 2 percent inflation target.

“You’d probably need a bigger slowdown to reassure the Fed that it’s successfully done its job; not yet, that hasn’t changed (policymakers are down Weekly) outlook.” After the inflation data, the interest rate futures market had priced in a 90 percent chance of a 25 basis point hike next week.

The dollar extended gains after another report on Friday showed that the University of Michigan’s consumer sentiment index came in at 63.5 in April, up from a three-month low of 62 in March. U.S. consumers’ one-year inflation expectations rose to 4.6 percent this month from 3.6 percent in March, further supporting rate hike expectations and also boosting the dollar. Meanwhile, the euro slipped 0.1% to $1.1017.

Economic data showed mixed growth and inflation across the euro zone, adding to uncertainty over the size of the ECB’s expected rate hike next week. Preliminary data showed that euro zone gross domestic product rose 0.1 percent in the first quarter, below the 0.2 percent forecast in a Reuters poll.

The euro fell more in early trade but pared losses as investors sold the yen against the euro. This also spilled over into the EUR/USD crosses. “We think the balance of odds is gradually shifting in favor of the dollar, a ‘Goldilocks’ mechanism for stronger activity data outside the U.S.,” Jonathan Petersen, senior market economist at Capital Economics, wrote in a research note. Appears to be fading, and we expect the greenback to benefit from safe-haven demand once the global growth picture begins to deteriorate more sharply in the coming months.”

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