Good morning, traders; Welcome to our market week preview, where we take a look at the economic data, market news and headlines likely to have the biggest impact the price of gold this week and beyond, as well as market prices for silver, the US Dollar, and other key correlated assets.
Gold prices look to be restabilizing near $1890/oz this morning, just after the open of cash trading in US stock markets. The precious metals slid sharply in pre-market trading on reports of another COVID-19 vaccine showing promising results in trials. The move initially looked like a replay of last week’s market open, but lacked the electoral fireworks that really drove last Monday’s market swings. In hours between the headlines and the start of market trading, gold has managed to regain nearly 100% of the early morning slide. Silver has rebounded as well, but is seeing less momentum.
Our economic calendar is light again this week; There are some regional Fed activity indicators which we typically cover that I’m choosing to leave out this week, as the markets overall—and particularly the Dollar and gold markets—have been mostly non-responsive to the immediate release of those data points given everything else going on. With another quiet calendar, expect risk markets to continue being directed by developments around the economic impact of a resurgent coronavirus crisis throughout the developed world, and damage being down by the US government’s inability to create the much-needed fiscal stimulus package to support the American household and economy through the winter ahead.
US Economic Data to Watch
Tuesday, November 17 at 830am EST // Retail Sales (Oct)
[consensus exp.: +0.5% MoM // prev.: +1.9%]
While the Retail Sales report, if it comes in as expected, won’t actually represent the damaging slowdown in spending that it nominally suggests—remember that September’s near-2% growth was well above expectations-- there is still room to worry when looking ahead. As we’ve touched on a few times in recent weeks, October economic data, especially metrics focused on consumer activity, represents the final impact of the last rounds of fiscal stimulus from the US government meant to support households and small to medium businesses. The 50 bips of growth in retail spending projected for October would be on trend with the rates we were seeing before the pandemic crisis, but it will hardly be indicative of an economy in recovery.
With little else in the way of top-tier data this week, it’s possible we see some market movement on Tuesday if the retail numbers disconnect noticeably from expectations. With the US Dollar’s recent pressure on gold having lightened somewhat (at the time of writing,) I expect we’ll be trading a more “normal” paradigm in which a downside miss in Retail Sales will provide a tailwind to gold prices while worrying investors, and better-than-expected numbers could weigh on the yellow metal as risk-appetite grows.
Thursday, November 19 at 830am EST // Initial Jobless Claims
[consensus exp.: +705k // prev.: +709k]
With surveyed economists on average expecting new unemployment claims to hold just above 700,000 for the tabulated week, the most important impact will be to continue pulling the 4-week average lower as well. Despite the odds of a federally enforced nationwide lockdown dropping significantly, some states and large metro areas are reinstating their own restrictions as we move into a risky winter. Because large numbers of service-industry closures seem to be much closer than any meaningful relief from the government at this time, my view on labor market data remains that any improvements we can squeeze in before the bottom falls out again leave us that much better prepared to enact a (hoped for) recover in 2021.
Having said all of that, outside of big beats/misses most of the market has been unreactive to the weekly labor data on its own. Keep an eye out for any big surprises this week, but mostly we’re filing the result of this one away to help us model the path into year-end.
FedSpeak this Week
We’re light on public appearances from Fed officials this week—at least, on ones that might provide useful commentary—as I assume officials will try to cram their pre-December meeting remarks into next week’s schedule ahead of Thanksgiving. It’s safe to assume that the FOMC team will continue to underline the need for fiscal stimulus to support the economy over the next quarter (or two,) and the need for it to be massive and fast-acting. Alongside that, with President-Elect Biden and Vice President-Elect Harris expected to announce some parts of their initial economic plan on Monday afternoon we may be able to see some of Fed officials’ first impressions of it.
Monday: Federal Reserve Vice Chair Richard Clarida (FOMC voter) (2pm EST)
Wednesday: New York Fed President John Williams (FOMC voter) (1215pm EST); St. Louis Fed President James Bullard (120pm EST)
And that’s how the week lays out ahead of us, traders. As always, I wish you all the very best of luck in your markets in the coming days, and I’ll look forward to seeing you all back here on Friday for our market-week wrap up.