Published: Sun, December 02, 2018
Finance | By Loren Pratt

Trump can not fire Fed Chairman Powell: Morgan Stanley

Trump can not fire Fed Chairman Powell: Morgan Stanley

Add to that the prospect of a shift in the global trade landscape following Saturday's dinner meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, as well as the risk of a government shutdown in Washington, and the coming week could prove to be a significant one for the Treasury market.

"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy - that is, neither speeding up nor slowing down growth", Powell said during a speech at the Economic Club of NY.

"The messaging from the USA over the last four weeks has been characteristically erratic", said David Page, senior economist at AXA Investment Managers.

Investors say a sustained market rally following the summit would hinge on there being substantive concessions from Trump, in particular whether Xi can persuade Trump to postpone a sharp tariff hike on Chinese goods due to take effect January 1. "If US growth slows down next year, as expected, gold would benefit from higher demand", analysts including Jeffrey Currie said in a November 26 note that endorsed bullion as one of its top 10 trade ideas for commodities.

"The 10-year note is perched at a critical level", said Chris Ahrens, chief market strategist at First Empire Securities in Hauppauge, New York.

The Shanghai Composite Index edged up 0.2 percent, Australian stocks gained 0.5 percent and Japan's Nikkei climbed 0.9 percent.

While the stock market's uneven footing is due to a variety of factors, one of those being the rate hikes, the GM announcement appears to be unrelated. that four U.S. plants in three states would be idled due to falling demand and from the products made at those factories.


Italy's borrowing costs slipped, with 10-year yields dipping around 2 bps IT10YT=RR .

The yield, which had risen as high as 3.25 percent earlier this month, inched back to 3.02 percent by 1220 GMT.

In the closing days of November, one-month contracts on 10-year notes are now up about 1.5 percent and testing old levels at $119 while 30-year futures are up more than 2 percent from recent lows, bumping against $140.

Among other precious metals, spot silver was down 0.1pc at $14.13 per ounce, having fallen to a near two-week low of $14.05 in the previous session. This was higher than the 221K estimate and the previous week's 224K reading.

It was "getting pretty obvious that at some point Powell would have to flinch", Trey Reik, senior money manager at the USA unit of Sprott Inc., which oversees $7.6 billion said in an interview.

Apart from US-Sino trade talks, the markets would also be focussing on whether OPEC and Russian Federation agree on oil production cuts next week. Brent crude LCOc1 settled at $59.51, up 1.28 percent. The yield was down about 1 basis point at 2.796 percent. It has slumped 21 percent this month, during which it fell to a 13-month trough of US$58.41.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. This article is strictly for informational purposes only. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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