Five Hundred Words 11/07/2018

Wednesday, November 7, 2018

Daily Writing

9:21 AM

Crude oil has undergone steep declines over the past few weeks.  What is the reasoning behind this?  The U.S. Dollar index has started to show weakness over the past several weeks as well.  According to experts, the weakness in the U.S. dollar index was expected after mid-term elections reflecting skepticism that the stimulus bonanza, including further tax cuts, that had fueled the dollar’s rally in the first half of the year, would continue under a split congress.[1]

We are eagerly awaiting two new developments from the UK and Europe in the coming days and weeks.  Theresa May has ordered a push for a Brexit deal this week, ordering her attorney-general Geoffrey Cox to prepare a legal solution that would unlock an agreement between the UK and Brussels.  We are keeping an eye on the impact of this week’s development on the GBP and EUR.

The second major development in Europe is also set to play out over the coming days.  The Italian government has until November 13 deadline to submit a re-drafted budget proposal to the Eurogroup.[2]  We don’t really see an easy resolution here, as “Rome’s populist government is standing firm ahead of a November 13 deadline to rewrite plans or escalate its stand-off with Brussels.”[3]

Something new to consider: the price of Uranium hit a 2.5 year high on November 5.  Uranium has been one of the best-performing commodities of 2018, rising more than 40% from its April lows.

According to data recently released by the People’s Bank of China (PBoC) in October, the central bank’s foreign exchange reserves dropped by roughly $32bn on account of China’s push to strengthen the renminbi in the face of potentially disastrous devaluation.  The PBoC is also intent on maintaining foreign currency reserves above $3tn, as these reserves serve as China’s means of suppressing the value of the renminbi.  Official foreign exchange reserves fell to $3.05tn by the end of October from $3.087tn a month earlier.  China’s forex reserves peaked at just under $4tn in mid-2014, but in the following two-and-a-half years the PBoC burnt through nearly $1tn to prop up the renminbi amid a capital outflow surge.

[1] https://www.marketwatch.com/story/dollar-slides-following-midterm-election-results-2018-11-07

[2] The Eurogroup is the recognized collective term for informal meetings of the finance ministers of the eurozone—those member states of the European Union (EU) which have adopted the euro as their official currency. The group has 19 members.

[3] https://www.ft.com/content/197f4ad2-e10b-11e8-8e70-5e22a430c1ad

 

Market Data

Resource Commodities

 

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

Gold Spot

1226.50

1230.60

1232.20

1232.55

1218.30

Silver

14.495

14.610

14.715

14.77

14.38

Platinum

867.00

864.00

NA

NA

NA

Copper

2.81

2.8034

2.8099

2.8012

2.7501

Uranium

27.85

NA

NA

NA

NA

Crude (WTI)

62.61

63.23

63.49

63.34

65.16

 

Global government bond yields (10 year)

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

US 10 Year

3.19%

3.20%

3.19%

3.18%

3.16%

Germany

0.45%

0.42%

NA

NA

NA

Brazil

10.26%

10.19%

NA

NA

NA

Italy

3.35%

3.40%

NA

NA

NA

Japan

0.11%

0.12%

NA

NA

NA

 

 

Major U.S. Indexes

 

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

VIX

18.03

19.84

20.18

19.24

20.96

DOW

257.85

254.52

254.44

254.84

252.42

S&P 500

277.55

273.36

271.89

274.75

271.64

NASDAQ

7442.00

7378.25

7356.99

7407.46

7332.72

 

Currency Cross Rates

 

November 7, 2018

November 6, 2018

November 5, 2018

November 2, 2018

November 1, 2018

USD/JPY

113.2900

113.2900

113.1600

113.28

112.750

EUR/USD

1.1476

1.1407

1.387

1.1385

1.1405

AUD/USD

0.7285

0.7229

0.7204

0.7193

0.7192

CHF/USD

1.0021

0.9964

1.0044

0.9955

0.992

USD/CNY

6.9165

6.9166

6.9273

6.8893

6.9346

USD Index

95.87

96.29

96.45

96.53

96.41

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