Happy holidays, traders! Welcome to the start of our two shortened trading weeks to end 2019 and roll into 2020. News flow and data releases will be minimized this week (and next) with the bank holidays falling mid-week. During the start of US trading sessions between now and January 6, it’s helpful to remember that the majority of London-based traders are offline and so market liquidity will be particularly low during those hours.
With all that in mind, gold prices are trading moderately higher this morning, once again rising above $1480/oz. Silver is building its strength above $17, the US10-yr yield is holding on to 1.90%, and the Dollar Index is flat.
In the absence of any real macroeconomic drivers, the yellow metal’s healthy start to the week is likely do to investors positioning for the end of the trading year and looking ahead with hopes that the surprisingly positive market performance of 2019 in many major asset classes will finally translate to rising demand for commodities in 2020.
US Economic Data to Watch
Monday, December 23 at 8:30am ET // Durable Goods Orders (Nov)
[actual: -2.0% MoM // consensus expectation: +1.5% // previous: +0.5%]
It appears that November’s Durable Goods data was hit even harder than many expected by more canceled Boeing orders. At the same time, it was bad miss this morning, and it extended to the more “core” numbers that don’t include big transportation spending, so I suspect once analysts dig through the data they may come back with some more worrying impressions about the US manufacturing sector. The data released this morning gave already-rising gold prices a boost of $2-3/oz; maybe some others share my concern.
Tuesday, December 24 at 10am ET // Richmond Fed Manufacturing Index (Dec)
[consensus exp.: +2.0 // prev.: -1.0]
Speaking of that old manufacturing workhorse, our survey data reads on the industrial sector have been spread out above and below expectations recently, although none of them have suggested accelerating growth. Especially given that the Fed in December acknowledged this downside risk to the economy, I wouldn’t expect even one more disappointing print to shake risk markets much this week, but if another Fed manufacturing index is printing negatives it will be something worth filling away to build out outlook for the start of 2020.
Thursday, December 26 at 8:30am ET // Initial Jobless Claims
[consensus exp.: +224k // prev.: 234k]
I touched on it briefly in last week’s recap: the last two weekly jobless claims numbers have surprised by rising above 225,000. I still don’t think it warrants any concern—especially with unemployment apparently nailed to the ground— but the longer-term trend is what’s really important in this data set, and if that line makes it up to 250,000 I suspect we’ll see more risk-off trading around the weekly released.
And that’s it, traders. That’s really all there is (on the schedule) to keep an eye on in this holiday week. You can expect our weekly recap on Friday to be similarly brief, but of course if any headlines break that have an impact on markets I’ll be sure to cover them there. Best of luck in whatever trading you might be doing this week, and I wish you a very happy holiday!