1. A turbulent five days for markets, featuring rising tensions in the Middle East and a port strike that both started and stopped, was capped off by a better-than-expected September jobs report that helped stocks close marginally up on the week. An update on inflation and the start of third quarter earnings reports will grab investor attention in the week ahead. The October Consumer Price Index (CPI) report will headline an economic calendar that will also feature updates on consumer sentiment and the release of the minutes from the Federal Reserve’s September meeting. On the corporate side, some of America’s largest financial institutions, including JPMorgan, Wells Fargo, and BlackRock, will kick off third quarter earnings season on Friday. PepsiCo and Delta Air Lines are also scheduled to report earlier in the week.
2. The better-than-expected September jobs report put an exclamation point on a trend that’s been underway for the better part of two months now. For investors who have closely followed the economic narrative over the past several years, this should all feel a bit familiar. Just as consensus believed the U.S. economy was finally slowing to the point where it needed help from the Federal Reserve, the data says otherwise. Escalating fears of a ‘hard landing,’ where the Fed’s restrictive interest rates send the economy into a tailspin, have quickly moved to discussion about a ‘no landing,’ where the economy keeps growing and inflation risks once again emerge. But it’s a delicate balance. Too much strength could mean once again seeing good news framed as the precursor to an inflation rebound. At times, data that’s come in weaker than expectations have been cheered by investors fearful of another spike in inflation and interest rates staying higher for longer than initially hoped. Markets appear to be wrestling with what the narrative shift means.
3. Fewer homeowners are refinancing their mortgages, and purchase activity is essentially flat after mortgage rates rose sharply last week. Applications to refinance a mortgage fell 9% through Friday compared to a week earlier, according to the Mortgage Bankers Association. The drop in applications came as mortgage rates moved broadly higher last week as traders rethought their expectations for future benchmark interest rate cuts from the Federal Reserve. Strong September hiring data strengthened the case for the central bank to make fewer and smaller rate cuts than some market participants had hoped for. Traders now see an 87% chance that the Fed will cut interest rates by 25 basis points at its November meeting, and a 13% chance that it leaves rates unchanged. The changing expectations sent Treasury yields and mortgage rates sharply higher. The average 30-year mortgage rate was around 6.62% on Monday, up nearly half a percentage point in a single week.
4. U.S. consumer sentiment slipped in October amid lingering frustration over high prices, a survey showed on Friday. The University of Michigan’s preliminary reading on the overall index of consumer sentiment came in at 68.9 this month, compared to a final reading of 70.1 in September. Economists polled had forecasted a preliminary reading of 70.8. “While inflation expectations have eased substantially since then, consumers continue to express frustration over high prices,” said Consumers Director Joanne Hsu. “Still, long run business conditions lifted to its highest reading in six months, while current and expected personal finances both softened slightly.” The survey’s reading of one-year inflation expectations rose to 2.9% from 2.7% in September. Its five-year inflation outlook dipped to 3.0% from 3.1% in the prior month.
5. The gold market is holding steady after the latest data shows U.S. producers saw moderate price pressures last month. The headline Producer Price Index (PPI) rose 0.1% in September, following August’s 0.2% increase, the U.S. Labor Department announced on Friday. The latest inflation data was in line with expectations, as economists looked for a 0.1% increase. In the last 12 months, headline wholesale inflation increased 1.8%, the report said, above the consensus of 1.6% but below August’s upwardly revised 1.9% reading. Gold prices spiked to session highs after the 8:30 am EDT data release, but quickly returned to their prior levels. Spot gold rose to a session high of $2,650.19 per ounce immediately following the PPI release, and last traded at $2,646.60 for a gain of 0.63% on the day.
6. Weekly jobless claims rose more than expected last week in a sign of cooling in the labor market. New data from the Department of Labor showed 258,000 initial jobless claims were filed in the week ending Oct. 5, up from 225,000 the week prior and above the 230,000 economists had expected. This marked the highest number of weekly unemployment claims since August 2023. Meanwhile, the number of continuing applications for unemployment benefits hit 1.86 million, up by 42,000 from the week prior.
7. U.S. crude oil on Friday was on pace to eke out its second weekly gain in a row as Israel prepares to retaliate against Iran. The U.S. benchmark and global benchmark Brent are ahead about 1% this week. Oil prices have gained more than 10% through Thursday’s close since Iran hit Israel with ballistic missiles last week. West Texas Intermediate November contract: $75.31 per barrel, down 54 cents, or 0.71%. Year to date, U.S. crude oil has gained about 5%. Brent December contract: $78.91 per barrel, down 49 cents, or 0.62%. Year to date, the global benchmark has increased more than 2%.
8. The Euro spent the week showing itself to be a bit soft, as the market continues to ask questions about risk appetite and global growth. At this point, you have to ask whether or not the Federal Reserve will continue to cut deeply. The Euro has gone back and forth during the course of the week as we continue to see a lot of noise in the large, round figures. The 1.10 level above is a bit of a barrier that people will pay close attention to, just as the 1.09 level underneath should be significantly supportive. In general, I think we look at this through the prism of a market that has sold off quite drastically over the last couple of weeks.
9. The U.S. dollar has been quiet against the Japanese yen during the trading week, as we are threatening the 150-yen level. This is an area that obviously is a large round psychologically significant figure and will almost certainly have a lot of options barriers. Short term pullbacks have been bought into though given enough time, we probably continue to see buyers jump in and try to take advantage of value.
A closely watched report on U.S. inflation showed consumer price increases ticked lower on an annual basis during the month of September, but “core” prices remained sticky, according to the latest data from the Bureau of Labor Statistics released Thursday morning. The Consumer Price Index (CPI) increased 2.4% over the prior year in September, a slight deceleration compared to August’s 2.5% annual gain in prices. The yearly increase, which was the lowest annual headline reading since Feb. 2021, came in hotter than economist expectations of a 2.3% annual increase. The index rose 0.2% over the previous month, matching the increase seen in August and hotter than the economist’s estimates of a 0.1% uptick. On a “core” basis, which strips out the more volatile costs of food and gas, prices in September climbed 0.3% over the prior month, stronger than the 0.2% uptick economists had expected, and 3.3% over last year. Core prices rose 0.3% month over month and 3.2% on an annual basis in August.
The rally that’s helped U.S. stocks almost double in value over the past five years is tapering off, and investors should expect low but positive returns on their investments, according to Bill Gross. The billionaire investor recommends keeping limited exposure to the stock market at average levels, while focusing portfolios more on defensive stocks, hard assets, with a small position in bonds. “No bear market, but it’s not the same bull market anymore,” Gross, the former chief investment officer of Pacific Investment Management wrote in his latest outlook. In the note, Gross lists negative headwinds, such as high valuations, geopolitical risks and an unsustainable government deficit, against positives forces, including inflation nearer to the Federal Reserve’s target and AI investment spending. Reports that Warren Buffett is now hoarding a record amount of cash also serve as a warning about the “bumpy road ahead,” Gross said.
Four cryptocurrency companies and 14 individuals have been charged in what U.S. prosecutors on Wednesday said was the first criminal prosecution of financial services firms for market manipulation and sham trading in the crypto sector. Federal prosecutors in Boston charged the firms Gotbit, ZM Quant, CLS Global, and MyTrade and their leaders and employees in a takedown that also involved arrests overseas. Five people have already agreed to plead guilty or have done so.
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)
| Oct. 4, 2024 | Oct. 11, 2024 | Net Change | ||
| Gold | $2,650.06 | $2,659.64 | 9.58 | 0.36% |
| Silver | $32.21 | $31.57 | -0.64 | -1.99% |
| Platinum | $993.90 | $986.84 | -7.06 | -0.71% |
| Palladium | $1,002.80 | $1,068.68 | 65.88 | 6.57% |
| Dow | 42356.16 | 42863.86 | 507.70 | 1.20% |
Previous Year Comparisons
| Oct. 13, 2023 | Oct. 11, 2024 | Net Change | ||
| Gold | $1,928.45 | $2,659.64 | 731.19 | 37.92% |
| Silver | $22.72 | $31.57 | 8.85 | 38.95% |
| Platinum | $884.38 | $986.84 | 102.46 | 11.59% |
| Palladium | $1,148.72 | $1,068.68 | -80.04 | -6.97% |
| Dow | 33672.20 | 42863.86 | 9191.66 | 27.30% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2656/2654/2652 | 31.10/29.92/28.95 |
| Resistance | 2661/2663/2666 | 33.13/34.09/35.21 |
| Platinum | Palladium | |
| Support | 980/973/958 | 999/986/975 |
| Resistance | 1002/1017/1025 | 1070/1085/1092 |