09/09/2024 Evening Reports
Donald Trump’s proposal to impose 100% tariffs on countries that avoid using the U.S. dollar could cause major global economic disruptions, warns Commerzbank’s Ulrich Leuchtmann. He suggests that such a policy might push nations away from the dollar, undermining its safe-haven status and potentially weakening the currency. While some analysts argue Trump’s focus on U.S. economic growth could strengthen the dollar, Leuchtmann highlights the risk of this strategy backfiring. Despite concerns, the U.S. dollar still holds 59% of global foreign-exchange reserves. Meanwhile, Trump narrowly leads Kamala Harris in recent polls.
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Markets Bounce Back as Traders Weigh Fed’s Rate Cut Options Amid Cooling Jobs Data
US stocks began to recover Monday after a sharp selloff driven by lower-than-expected job growth, which left traders speculating on how the Federal Reserve will approach future interest rate cuts.
Nasdaq 100 futures climbed nearly 1%, rebounding from its largest drop since November 2022.
Meanwhile, bond yields edged up as uncertainty looms over whether the Fed will ease rates gradually or opt for a more aggressive 50 basis-point cut in September.
Concerns over a potential recession and upcoming inflation data continue to fuel market volatility, with the Cboe Volatility Index remaining elevated.
Gold Prices Steady as Market Awaits U.S. Inflation Data and Fed Rate Decision
Gold prices remained steady on Monday as investors focused on upcoming U.S. inflation data, which could influence the size of the Federal Reserve’s anticipated interest rate cut. Spot gold was stable at $2,498.06 per ounce, while U.S. gold futures rose slightly. Traders are betting on a 75% chance of a 25-basis-point cut at the Fed’s meeting next week, though this could change depending on Wednesday’s U.S. consumer price data and Thursday’s Producer Price Index report.
Recent U.S. employment data showed slower-than-expected job growth in August, but a drop in the unemployment rate to 4.2% reduced the likelihood of a larger 50-bp rate cut. Federal Reserve officials expressed openness to back-to-back or larger cuts depending on the data. Gold, which thrives in a low interest rate environment, continues to benefit from these expectations. Meanwhile, China’s central bank has not increased its gold reserves for the fourth consecutive month, according to official data.
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Morgan Stanley Cuts Oil Forecast Again As Concerns Deepen
Morgan Stanley reduced its Brent crude price forecasts for the second time in a matter of weeks, as demand challenges mount while supplies remain plentiful. The global benchmark will average $75 a barrel in the fourth quarter, according to a note from analysts including Martijn Rats. That compares with an earlier projection of $80 between October and December, which was issued just last month in a cut from the prior outlook for $85. Predictions for most of next year were also pared back slightly. Brent recently tumbled to the lowest close since late 2021 as sustained concerns about weaker Chinese demand fused with signals that the US economy may be slowing.
At the same time, output remains ample, forcing OPEC+ to defer a plan to relax its own production curbs. “The recent trajectory of oil prices has similarities to other periods with considerable demand weakness,” Rats and his colleagues said in the report dated Sept. 9. Time spreads — price comparisons along the futures curve — indicated the coming of “recession-like inventory builds,” although it was too early to make this the bank’s base case, they said.Morgan Stanley’s rethink about the outlook has been echoed by concerns at other leading banks. Goldman Sachs Group Inc. pared its view last month, while more recently Citigroup Inc. said the market looked oversupplied and prices could average $60 a barrel in 2025 unless OPEC+ cut deeper. Brent — which sank almost 10% last week — traded near $72 a barrel on Monday, with major commodity trader Trafigura Group telling an industry conference in Singapore that the price was set to drop into the $60s in the near future.
