James Brodie
Head of Learning & Development, Flux
Possible US Gov Shutdown, Yen Strength, Upcoming Data
Dollar slumps as shutdown risk and tariff threats boost gold/silver; yen firms, PMIs steady, yields jump, upcoming data
The dollar gets hit hard this morning (after its worst week since June), plus Gold (+1.9%) & Silver (+5.7%) jump again on likely government shutdown, Trumps 100% tariff threats on Canada and continued geopolitical tensions (U.S. ‘Armada’).
Gold now accounts for 25% of total world reserves. Polymarket: 80% chance of another US government shutdown by the end of next week as Shumer says Dems wont advance funding will with DHS bill. The dollar sits right on multiyear support, a break lower isn’t unchartered territory, but it will further propel hard assets. (Chart 1, Dollar Index multiyear, Bloomberg)
Yen finally strengthening, no intervention on Friday but the New York Fed ‘asked for price levels’, effectively scaring the market without intervening. The PM Takaichi further jawboning over the weekend ‘govt will take necessary steps against speculative, abnormal market moves.’ This chart from SocGen highlights the Yen’s role in equity volatility, based on cheap funding, the ‘carry trade’. (Chart 2, SocGen)
U.S. composite flash PMIs remain in growth at 52.8 (mfg 51.9, services 52.5)
Trump: if Canada makes a deal with China, it will immediately be hit with a 100% tariff against all Canadian goods and products coming into U.S.A
The future copper shortage in one chart (Chart 3, Bernstein, FT)
Oracle CDS hits 1-year high.
Intel falls 17%
UK 10-year yield has biggest weekly jump since April (=12bp).
Data this week:
Monday – Herman IFO, US durable goods orders
Tuesday – US consumer confidence
Wednesday – US Fed decision (no move expected) Bk of Canada rate decision, Australian CPI
Thursday – US jobless claims
Friday – EZ GDP & unemployment, US PPI
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