Tag: finance

Today’s AM fix was USD 1,346.00, EUR 967.16 and GBP 809.72 per ounce.  

Yesterday’s AM fix was USD 1,362.50, EUR 979.37 and GBP 820.49 per ounce.      

Gold extended losses to a third session today. Gold has fallen from the six month high of $1,391.76, touched earlier this week on the deteriorating geo-political situation between Russia and the West. Traders have taken profits as tensions have eased somewhat, in the short term at least.

Gold should be supported by the deterioration in relations between the U.S. and Russia. Russian Foreign Minister Sergei Lavrov told U.S. Secretary of State John Kerry that Western sanctions over the Crimea dispute were “unacceptable” and “will not remain without consequences.”

 

Putin said he did not plan to seize any other part of Ukraine, and Kerry later cautioned that any incursion into other parts of Ukraine would be an “egregious step” and a major challenge for the international community. Geopolitical risk shows the importance of owning gold as a hedging instrument and safe haven diversification.

Traders may have been hesitant to go long gold, ahead of the meeting of the Federal Reserve.  The meeting is the first presided over by Fed Chair Janet Yellen.

Yellen said the Fed could keep interest rates unusually low even after the U.S. job market returns to full strength and inflation rises to the central bank’s target. Yellen also dropped a set of guideposts it said it was using to help the public anticipate when it would finally start bumping overnight borrowing costs up from record low levels at zero, including the employment measure. It said, however, that dropping a promise to hold rates steady “well past the time” the U.S. unemployment rate falls below 6.5 percent did not indicate any change in its policy intentions. Rather than relying on unemployment and inflation thresholds to guide expectations, it said it would use a wide range of economic indicators.

But what stood out in the Yellen’s statement was her embrace of easy money policies even after the Fed achieves its goals of full employment and 2% inflation.  Stocks rose on the news as expected. This is bullish for gold, despite weakness in recent hours.

The bottom line is that the Fed is set to maintain ultra loose monetary policies in the form of continuing debt monetisation and near zero percent interest rates. Yellen basically confirmed today that she is going to “print baby print”.

Reuters reports that dealers of gold bullion in Singapore and Hong Kong, noted a slowdown in physical demand in recent days. Premiums have fallen and domestic gold prices in China are trading at discounts to cash gold.

Concerns about a spate of Chinese corporate bond defaults and the shadow banking system in China should support gold but demand appears to have abated somewhat in recent days. Although it may be best to wait to see the monthly import export data prior to writing off Chinese demand just yet.

Chinese defaults and problems in the Chinese financial system will be very gold supportive as the Chinese use gold as a store of value and financial and systemic risk will lead to safe haven demand.

Owning physical bullion coins and bars in segregated, allocated accounts in Singapore is now one of the safest ways to own precious metals. Protect and grow your wealth by reading The Essential Guide To Storing Gold In Singapore

via Zero Hedge http://ift.tt/PQn3wT GoldCore

In case you misunderstood and judged the market's reaction to Janet Yellen's first FOMC statement, the ultimate Fed mouthpiece is out with a few clarifying words (well 712 words posted in under 4 minutes). The Wall Street Journal's Jon Hilsenrath clarifies "The Fed stressed it has not changed its plan to keep interest rates low long after the bond-buying program ends," and added further that "the Fed said explicitly for the first time that it likely would keep short-term rates lower than normal, even after inflation and employment return to their longer-run trends." While noting a bigger consensus of members around a 2015 rate 'liftoff', Hilsenrath is careful to point out that the Fed also blamed the weather for not having a clue.

 

Via WSJ,

The Federal Reserve on Wednesday altered its guidance on the likely path of interest rates, putting less weight on the unemployment rate as a signpost for when rate increases will start, while affirming its plan to keep borrowing costs low far into the future.

 

Since late 2012, the Fed had said it wouldn't consider raising interest rates from near zero until the jobless rate fell to 6.5%, provided inflation looks likely to remain below 2.5%. In a new policy statement released Wednesday, the Fed dropped the reference to the 6.5% jobless rate, which officials have come to see as too limited an indicator of the labor market's health.

 

Instead, the central bank said it would "assess progress…toward its objectives of maximum employment and 2 percent inflation" in deciding when to raise rates from near zero, where they've been since late 2008. In judging that progress, the Fed will "take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments," the statement said.

 

Moreover, the Fed said explicitly for the first time that it likely would keep short-term rates lower than normal, even after inflation and employment return to their longer-run trends. Its latest projections, also released Wednesday, showed officials coalescing around a 2015 liftoff for interest rates.

 

Ten of 16 Fed officials said they saw the Fed's benchmark interest rate rising to 1% or more by the end of 2015, a slight uptick in projections from December, when only seven officials saw rates at or above the 1% level. Twelve of 16 officials expected the rate to be at or above 2% by the end of 2016. In December, eight officials saw rates at or above 2% by the end of 2016.

 

Fed Chairwoman Janet Yellen will likely elaborate on the rate guidance changes at her first press conference as Fed chief, scheduled to begin at 2:30 p.m. Eastern time.

 

As expected, the Fed also said it would reduce its monthly bond purchases by another $10 billion per month in April, to $55 billion from $65 billion in February and March. The Fed said it would reduce its purchases of long-term Treasury bonds to $30 billion-per-month and cut its purchases of mortgage-backed securities to $25 billion-per-month, a reduction of $5 billion for each. The bond-buying program seeks to push down long-term borrowing rates to spur investing, spending and hiring.

 

The Fed has been moving toward the change in language about interest rate policy for a few months as the jobless rate fell closer to the 6.5% threshold. The rate was 6.6% in January and 6.7% in February, but Fed officials say they see other reasons to keep rates low, including other signs of slack in the economy and headwinds that are still holding the economy back.

 

The Fed stressed it has not changed its plan to keep interest rates low long after the bond-buying program ends. Officials continue to believe it is likely they will keep rates near zero "for a considerable time after the asset purchase program ends," especially if inflation continues to run below the Fed's 2% target, the statement said.

 

Officials explicitly acknowledged that they changed their rate guidance because the unemployment rate had gotten close to the 6.5% threshold. "The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements," officials said.

 

In their statement, Fed officials acknowledged the recent string of soft economic data, saying that "economic activity slowed during the winter months, in part reflecting adverse weather conditions."

 

Eight of the nine voting members of the policy-making committee supported the changes to the rate guidance and bond-buying program. Minneapolis Fed President Narayana Kocherlakota dissented, objecting to removal of the quantitative unemployment and inflation thresholds from the Fed's guidance on interest rates.

 

Normally, all seven Fed governors vote at every policy meeting, as does the president of the Federal Reserve Bank of New York. But the Fed board of governors currently has three vacancies.

 

The presidents of the 12 regional Fed banks vote on a rotating basis. This year, Cleveland Fed President Sandra Pianalto, Dallas Fed President Richard Fisher, Philadelphia Fed President Charles Plosser and Mr. Kocherlakota of Minneapolis vote.

via Zero Hedge http://ift.tt/PQhiPR Tyler Durden

Confused why the market is confused by the latest FOMC jibberish, whose “new and improved” forward guidance is a total disaster, which was to be expected now that the old has been scrapped and is dead and buried? It’s simple: there were 877 words in the FOMC statement, which is an all time record. Even the Fed is having problems explaining to itself what it means. And yes, that includes the first instance of the scapegoating word “weather.”

Source: FOMC

via Zero Hedge http://ift.tt/1lPxNWa Tyler Durden

Drum roll please… A shift from quantitative thresholds to hand-waving along with lower growth expectations and lower unemployment expectations (and more Fed members seeing rate hikes in 2015) – plenty of confusion in there for everyone… Over to you Janet…

 

Live streaming video by Ustream

h/t @Not_Jim_Cramer for Velma

via Zero Hedge http://ift.tt/1gbwtNX Tyler Durden

While the talking heads are desparate to maintain the myth that this statement is dovish, the fact is, the flow of free money from the Fed is slowing and confusion of the outlooks for growth (and more Fed member see rate hikes in 2015) means Yellen’s dovishness is being questioned aggressively by the bond and stock markets. The S&P 500 fell 12 points. Treasuries are getting clubbed with major short-dated selling (and bear-flattening). The dollar is surging and gold is down modestly.

 

via Zero Hedge http://ift.tt/1gbwoKg Tyler Durden

While everyone is debating just what the Fed’s new qualtiative guidance means, the Fed quietly lowered its GDP forecast for 2014-2016 modestly from its December forecast, even as it sees unemployment falling faster than before, and hitting 5.2%-5.6% by 2016.

 

And perhaps more important, the “dots” now indicate that the number of people who see policy firming in 2015 is 13, up 1 from 12 in December.

via Zero Hedge http://ift.tt/1gbwiCt Tyler Durden

As expected Janet Yellen's first FOMC statement showed another $10bn taper (more tightening according to Jim Bullard) but the wordy shift from quantitative thresholds to "we'll know it when we see it" qualitative guidance is relatively dovish (despite improved economic outlooks):

• FOMC SEES `SUFFICIENT UNDERLYING STRENGTH' IN ECONOMY
• FOMC SAYS IT WILL LIKELY REDUCE QE IN `FURTHER MEASURED STEPS'
• FED: LOW TARGET RATE APPROPRIATE FOR CONSIDERABLE TIME POST-QE
• MORE FED OFFICIALS SEE AT LEAST 1% FED FUNDS RATE END OF 2015

Most importantly perhaps, if expected, forward guidance is now dead, as it is a confirmed failure:

• FED DROPS 6.5% JOBLESS THRESHOLD FOR RAISING FED FUNDS RATE

While Bernanke's last meeting appeared full of disagreement; this time less so (as Plosser and Fisher appeared not to dissent). Full redline to follow.

Pre-FOMC: S&P Futs: 1873.5, Gold $1337, 10Y 2.712%, USDJPY 101.65

The hand-waving begins:

• FOMC TO WEIGH `WIDE RANGE OF INFORMATION' ON JOBS, INFLATION

As they lower growth outlook and lower unemployment outlook?!

• FED: 2014 GDP GROWTH OF 2.8%-3.0% VS 2.8%-3.2% IN DECEMBER (lower growth)
• FED: END-2014 JOBLESS RATE AT 6.1%-6.3% VS 6.3%-6.6% IN DEC. (but lower unemployment)

Full statement redline below

 

via Zero Hedge http://ift.tt/1gHo1Vw Tyler Durden

As traders, economists, and TV talking-heads parse every word of Janet Yellen's first FOMC statement for hints at when the punchbowl (if ever) will be removed, there is – as the following chart clearly shows – only one thing that really matters…

 

h/t @Not_Jim_Cramer

And as we know all that matters for stock prices is the Fed balance sheet…

 

Unfortunately, for those hoping for moar, the trend is not your friend as it seems we saw "peak FOMC words" in December…

 

So now we know – we must see more words or it's all over…

via Zero Hedge http://ift.tt/1gHlafb Tyler Durden

Now that the non-fighting and the Crimean annexation is over, all that’s left are cheap words and hollow threats.

First, Ukraine has effectively given up on claims to Crimea… 

• UKRAINE TO REMOVE MILITARY FROM CRIMEA TO MAINLAND: PARUBIY
• UKRAINE TO SEEK DEMILITARIZED ZONE STATUS FOR CRIMEA: PARUBIY

… but hopes to make Russia’s life more difficult:

• UKRAINE PLANS TO INTRODUCE VISA REGIME WITH RUSSIA: PARUBIY

And just in case Russia decides to steamroll unobstructed into other areas of East Ukraine, Kiev is pretending it is taking measures:

• UKRAINE TO FORTIFY MILITARY ON EASTERN BORDER: PARUBIY
• UKRAINE TO STRENGTHEN SECURITY AT NUCLEAR POWER PLANTS

Finally, Ukraine somehow still thinks it has any leverage:

• UKRAINE TO SEEK COMPENSATION FOR RUSSIA SEIZING ASSETS

And this stinger for Russia which will surely lose much sleep now:

• UKRAINE PLANS TO LEAVE CIS, PARUBIY SAYS

As for the US, it is just comical now:

• RUSSIA CREATING `DANGEROUS SITUATION,’ CARNEY SAYS
• U.S. PREPARED TO IMPOSE FURTHER COSTS ON RUSSIA, CARNEY SAYS

Costs – drink. And speaking of “dangerous situations”, perhaps the biggest danger here is that the US still thinks it is the sole superpower in a unipolar world. It clearly no longer is.

via Zero Hedge http://ift.tt/PQ3qVJ Tyler Durden

Something hilarious, and at the same time pathetic, happened earlier today: at precisely 9 am the US Treasury released its delayed Treasury International Capital data (which was supposed to be released yesterday but was delayed because it snowed) which disclosed all the latest foreign Treasury holdings for the month of January. Among the key numbers tracked and disclosed, was that China’s official holdings increased from $1.270 trillion to $1.284 trillion, that Japan holdings declined by a tiny $0.2 billion, that UK holdings increased by $7.8 billion to $171 billion, and that holdings of Caribbean Banking Centers, aka hedge funds, declined by $16.7 billion. Here is Reuters with the full data summary (save it before this article is pulled).

So why is it hilarious and pathetic? Because just three short hours later, the Treasury – that organization that has billions of dollars at its budgetary disposal to collate, analyze and disseminate accurate and error-free data – admitted that all the previously reported data was in effect made up!

Of course, it didn’t phrase it as such. Instead, what TIC did was release an entire set of January numbers shortly after it had released the “old” numbers, which differed by a small amount but differed across the board – in other words, not a small typo here and there: a wholesale data fudging exercise gone horribly wrong. For example:

• Instead of a $14 billion increase, China’s revised holdings were only $3.5 billion higher.
• Instead of unchanged, Japan’s holdings suddenly mysteriously increased by $19 billion in January.
• Instead of plunging by $17 billion, the Caribbean Banking Centers were down by a tiny $1 billion.
• And instead of the previously reported increase of just under $1 billion, the all important Russia was revised to have sold $7 billion, bringing its new total to just $132 billion ahead of the alleged previously reported dump of Fed custody holdings in mid-March.

That this glaring confirmation that all TIC data is made up on the fly, without any real backing, and merely goalseeked is disturbing enough. For what it’s worth, the latest TIC data is here. Feel free to peruse it before it is revised again

However, what was perhaps more disturbing than even that was the revelation that as of January, the US has a brand new third largest holder of US Treasurys, one which in the past two months has added over $100 billion in US Treasury paper, bringing its total from $201 billion in November, to $257 billion in December, to a whopping $310 billion at January 31.

The country? Belgium

The same Belgium which at the end of 2013 had a GDP of just over €100 billion, or a little over one-third what its alleged UST holdings are.

And somehow the Treasury expects us to believe that tiny Belgium – the center of the doomed Eurozone which is all too busy running debt ponzi scheme of its own – bought in two months nearly as much US Treasurys as its entire GDP?

Apparently yes. However we are not that naive.

So our question is: just who is Belgium being used as a front for?

Recall that for years, the “UK” line item on TIC data was simply offshore accounts transaction on behalf of China. Of course, since China hasn’t added any net US paper holdings in the past year, the UK, and China, are both irrelevant in the grand scheme of things.

But not Belgium. Because with Russia (or someone else) rumored to have sold or otherwise reallocated $100 billion in US Treasurys in March away from the Fed, we wouldn’t be surprised if the Belgium total holdings somehow soared to over $400 billion when the March data is revealed some time in May. Courtesy of the excel goalseeking function of course.

Needless to say, this all ignores the initially confirmed fact that all the data presented above is made up gibberish, goalseeked by a bored intern at the Treasury, and whose work got zero error-proofing before its released to the entire world earlier today.

So… just what is going on with this most critical of data sets – official foreign holdings of US paper, and how long before an Edward Snowden emerges from the depths of the US Treasury building and reveals that behind all the data manipulation and unaudited figures was none other than the Fed, whose holdings, far greater than represented, are all that matter, and everything else is merely one grand, theatrical plug?

via Zero Hedge http://ift.tt/OyNtSu Tyler Durden