US Markets Hit on Debt Fears – Dow Down 1.9%
US markets took hits across the board in trading yesterday as fears of more debt for the economy if President Trump’s tax-cut bill is passed continued to influence investors. All three of the major indices took substantial hits, the Dow leading the way, losing 1.91% on the day, with the S&P and Nasdaq following in its wake, down 1.61% and 1.41%, respectively. The dollar dropped as well, the DXY down 0.39% to 99.60, while Treasury yields again jumped higher—the 2-year up 4.9 basis points to 4.020%, and the 10-year up 11.2 basis points to 4.599%, pushing through the high in April. Oil prices dipped on news of fresh talks between the US and Iran, with both Brent and WTI contracts down 1.13% to $64.64 and $61.33, respectively, while gold pushed higher again, up 0.76% to $3,313.94 an ounce.
Gold Pushes to 1-Week High
Gold pushed higher in trading yesterday to hit a 1-week high as investor concern increased on US debt, pushing the dollar lower against most products. Markets are looking for the next catalyst to propel products one way or the other, and as time pushes on, uncertainty increases, and safe-haven products like gold are becoming more and more attractive. Increased geopolitical issues in the last couple of days, including talk of Israeli strikes on Iran, have also seen flows pour into the world’s favourite precious metal, and traders are now looking to see if we will hit another all-time high again in the next few weeks. Gold is sitting 5% under the record high, and if it can break through trendline resistance around $3,375.00, then we could see a push for fresh highs yet again. Any pullback on US debt issues or news of trade deals would see haven flows exit and pull gold back into recent ranges.
PMI Data in Focus for Traders Today
There are a raft of Flash Services and Manufacturing PMI numbers out today across all three trading sessions, which investors will be keen to see in light of recent trade updates. PMI data is due out in Australia, France, Germany, the EU, the UK, and the US, and traders are expecting to see moves across markets on their release. The Asian session will also see a focus on Kiwi markets, with the Annual Budget due for release midway through the day, while the European session will see the focus on the PMI data as the numbers are released within the space of a couple of hours at the start of the day. The New York session will see the Weekly Unemployment Claims data released alongside the PMI numbers, with Existing Home Sales updates also due out. There will be a focus later in the day on Canadian markets, with Bank of Canada Governor Tiff Macklem speaking towards the end of the session at the G7 meetings.
