1. U.S. stocks rebounded on Monday on the heels of the S&P 500’s worst week since early 2023, as inflation came back into focus for investors gauging pressures that could influence the size of interest rate cuts. The major averages were on pace to regain some of the ground they lost after the August jobs report failed to settle a key question: How aggressively will the Federal Reserve lower interest rates? The neither-hot-nor-cold data left Wall Street guessing whether a cut of 25 or 50 basis points is likely at this month’s policy meeting. At the same time, comments by Fed officials appeared to tilt the market in favor of a 0.25% cut by suggesting that incoming data would have to support the need for larger and further easing.
2. The Federal Reserve unveiled plans that would massively scale back a proposal to raise capital requirements for banks after politicians and the banking industry pushed back on the initial plan, warning it could restrict lending and hurt the economy. The new proposal would increase capital levels for big banks like JPMorgan Chase and Bank of America by 9% in aggregate, down by half from the original plan from more than a year ago, which set the capital increase to around 19% for those institutions. Banks with assets between $100 billion and $250 billion, which were initially subject to the stricter standards of the largest banks, would also no longer be subject to the increases, other than the requirement to recognize unrealized gains and losses of their securities portfolios in regulatory capital. This is a major reversal following the string of regional bank failures last year that was touched off by Silicon Valley Bank. The proposed changes unveiled Thursday are part of an effort by bank regulators to follow through on the U.S. version of an international accord known as Basel III, which was developed by the Basel Committee on Banking Supervision. The goal of the Basel committee, which was convened by the Bank for International Settlements in Basel, Switzerland, was to set global regulatory capital standards so that banks would have enough in reserves to cover unforeseen losses and survive crises.
3. Europe’s auto industry could face fines of 15 billion euros ($17.4 billion) for carbon emissions due to slowing demand for electric vehicles, Renault CEO Luca de Meo said on Saturday. Automakers face tougher EU CO2 targets in 2025 as the cap on average emissions from new vehicles sales falls to 94 grams/km from 116 g/km in 2024. “If electric vehicles remain at today’s level, the European industry may have to pay 15 billion euros in fines or give up the production of more than 2.5 million vehicles,” de Meo told France Inter radio. “The speed of the electric ramp-up is half of what we would need to achieve the objectives that would allow us not to pay fines,” de Meo, who is also president of the European Automobile Manufacturers Association (ACEA), said of the sector. “Everyone is talking about 2035, in 10 years, but we should be talking about 2025 because we are already struggling,” he said. “We need to be given a little flexibility. Setting deadlines and fines without being able to make that more flexible is very, very dangerous.”
4. Oil resumed its downward trend on Tuesday, tanking more than 3% after oil alliance OPEC lowered its demand growth forecast in 2024 and 2025. On Tuesday, West Texas Intermediate slid more than 3% to hover near $66 per barrel, while Brent also fell to trade below $70 per barrel, its lowest level since December 2021. In its monthly report, OPEC said it expects oil demand growth in 2024 to increase by about 2.0 million barrels per day, 80,000 barrels less than its prior estimate. The oil alliance also slightly lowered its 2025 growth forecast. China was one of the main drivers for the downward revision. The country has been facing economic headwinds amid a housing crisis. OPEC’s growth forecast is still higher than other industry estimates. The U.S. Energy Information Administration predicts oil growth of 1.1 million barrels per day this year.
5. In another blow to America’s EV transition, buyers are balking at purchasing a new EV. In its latest Mobility Consumer Index, consulting firm EY found that only 34% of U.S. consumers plan to purchase an electrified vehicle (meaning fully electric, plug-in hybrid, or hybrid) as their next car. That’s down from 48% in EY’s 2023 survey. Looking specifically at fully electric vehicles, the number drops to a paltry 11% from 22% a year ago. Electric vehicles have a “much higher magnitude of costs,” said a general manager of a Southern California dealership. That’s especially true when it comes to body or structural repairs. EY’s latest study follows J.D. Power’s EV purchasing survey released in May, which found EV buying sentiment dropped for the first time since the research firm began polling consumers in 2021. A big reason for the drop in J.D. Power’s survey was charging infrastructure, of lack thereof. Another concern was battery replacement costs and reduced performance in colder climates. The report’s overall findings suggest that the transition to EVs will be bumpy.
6. The number of Americans filing new applications for unemployment benefits increased marginally last week, pointing to a still-low level of layoffs even as the labor market slows. Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 230,000 for the week ended Sept. 7, the Labor Department said on Thursday. Economists polled had forecast 230,000 claims for the latest week. Government data last week showed nonfarm payrolls increasing by less than expected in August but the unemployment rate falling to 4.2% from 4.3% in July.
7. Oil prices rose more than $1 a barrel on Friday, extending their rally and putting crude on course for a weekly gain on the back of output disruptions in the U.S. Gulf of Mexico after Hurricane Francine forced the evacuation of production platforms. Brent crude futures were up $1.16 cents, or 1.6%, at $73.13 a barrel by 10:49 a.m. EDT. U.S. West Texas Intermediate crude futures rose $1.24, or 1.8%, to $70.21. If those gains hold, both benchmarks will break a streak of weekly declines despite Brent crude dipping below $70 a barrel on Tuesday for the first time since late 2021. At current levels, Brent is set for a weekly increase of about 3% while WTI is poised to register a roughly 3.5% gain.
8. EUR/USD builds on Thursday’s gains and trades in positive territory near 1.1100 in the American session on Friday. The U.S. Dollar struggles to hold its ground despite the upbeat consumer sentiment data for September, allowing the pair to stretch higher.
9. USD/JPY remains under selling pressure on Friday and hits a fresh YTD low. The divergent Fed-BoJ policy expectations continue to weigh heavily on the pair. Investors look to Fed and BoJ meetings next week for a fresh directional impetus.
U.S. stocks tumbled on Wednesday as investors digested an inflation report that showed consumer price increases ticked lower during August. The benchmark S&P 500 fell more than 1.2%, while the tech-heavy Nasdaq Composite was off about 0.8%. The Dow Jones Industrial Average dropped about 1.5%, or more than 600 points, extending losses from the prior trading session. Investors had been looking to August’s consumer price index to lift the uncertainty around the size of the Federal Reserve’s first interest-rate cut in years. The data showed headline inflation slipping to a more than three-year low. But “core” prices, which strip out the more volatile costs of food and gas, climbed 0.3% over the prior month, above the 0.2% economists had expected. After a mixed monthly jobs report, the price data was expected to help settle the debate over whether to expect a 0.5% or 0.25% easing in the Fed’s policy decision next week. And after the hotter-than-expected month-over-month increase for core inflation, traders are now favoring a smaller cut from the Fed at its meeting next week.
U.S. mortgage rates dropped this week on expectations that the Federal Reserve would start cutting interest rates next Wednesday but will likely not offer an immediate boost to the housing market as home prices remain elevated. The average rate on the popular 30-year fixed-rate mortgage fell to 6.20%, the lowest since February 2023, from 6.35% last week, mortgage finance agency Freddie Mac said in a statement on Thursday. It averaged 7.18% during the same period a year ago. The average rate on the 15-year fixed-rate mortgage declined to 5.27% from 5.47% last week. That compared to an average of 6.51% a year ago.
U.S. wholesale price increases mostly slowed last month, the latest evidence that inflation pressures are cooling enough for the Federal Reserve to begin cutting interest rates next week. The Labor Department said Thursday that its producer price index — which tracks inflation before it reaches consumers — rose 0.2% from July to August. That was up from an unchanged reading a month earlier. But measured from a year ago, prices were up just 1.7% in August, the smallest such rise since February and down from a 2.1% annual increase in July. The producer price index can provide an early sign of where consumer inflation is headed. Economists also watch it because some of its components, notably healthcare and financial services, flow into the Fed’s preferred inflation gauge, the personal consumption expenditures, or PCE, index.
Volatility should be expected to remain high as investors will be closely watching for hints on upcoming monetary policy direction. Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hopes that they will be able to withstand corrections in multiple market sectors. Many of these investors have included physical precious metals as part of their diversification plans, given their long history as a hedge against both inflation and during times of economic turmoil. Remember, the key to profitability through the ownership of physical precious metals is to own the physical product and hold it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run.
Trading Department – Precious Metals International Ltd.
Friday to Friday Close (New York Closing Prices)
| Sept. 6, 2024 | Sept. 13, 2024 | Net Change | ||
| Gold | $2,495.53 | $2,582.63 | 87.10 | 3.49% |
| Silver | $27.91 | $30.63 | 2.72 | 9.75% |
| Platinum | $920.65 | $1,001.60 | 80.95 | 8.79% |
| Palladium | $918.00 | $1,071.43 | 153.43 | 16.71% |
| Dow | 40346.20 | 41393.85 | 1047.65 | 2.60% |
Previous Year Comparisons
| Sept. 15, 2023 | Sept. 13, 2024 | Net Change | ||
| Gold | $1,924.76 | $2,582.63 | 657.87 | 34.18% |
| Silver | $23.07 | $30.63 | 7.56 | 32.77% |
| Platinum | $931.27 | $1,001.60 | 70.33 | 7.55% |
| Palladium | $1,253.87 | $1,071.43 | -182.44 | -14.55% |
| Dow | 34618.60 | 41393.85 | 6775.25 | 19.57% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2482/2448/2425 | 27.33/26.74/25.80 |
| Resistance | 2597/2619/2638 | 30.75/31.16/31.75 |
| Platinum | Palladium | |
| Support | 909/896/880 | 888/865/826 |
| Resistance | 1005/1015/1047 | 1012/1046/1100 |