from Forbes Breaking News
Gold Market Commentary: Higher-For-Longer: Inflation Not Growth
from Gold.org
New-high fatigue?
Gold had another good month in April, posting a 4% gain and ending the month at US$2,307/oz. Unlike March, gold finished off its intra-month high from probable buyer reticence and profit-taking – reflected in falling Chinese premia, lower Indian imports and flat-lining COMEX positioning. On the flipside, the trend in North American gold ETF flows turned positive – albeit slightly – joining strong demand for Asian ETFs.
Turning to our Gold Return Attribution Model (GRAM), existing variables and their longer-term relationships to gold returns have, for the second consecutive month, failed to capture price strength in its entirety. Adding a geopolitical risk proxy as well as positioning in the Shanghai futures exchange offers an explanation for some of the moves in March and April, but one other major explanatory factor is still missing. In this context, we believe that central bank buying, as recorded in our recent Gold Demand Trends report and evidenced in higher LBMA volumes, was once again a significant contributor to gold returns.
Considerable Uncertainty About Inflation Over the Next Three Months
by Joshua Gibson
FX Street
Mary C. Daly, President of the Federal Reserve (Fed) Bank of San Francisco, highlighted the uncertainty facing the Fed while participating in a fireside chat at George Mason University in Virginia.
Key highlights
The last three months has left considerable uncertainty about the next few months of inflation.
There is considerable uncertainty about inflation in the next three months.
Daly is getting different signals from firms who say consumers seem to be getting choosy but input prices are not yet receding.
There’s Still a Big Hidden Force for High Inflation in the Economy
by John Carney
Breitbart.com
The Pandemic Saving Rate Fueled Inflation
The American consumer may have one more jump scare left for the economy.
Slasher films all tend to end the same way. The murderous psycho has seemingly been vanquished. The protagonists finally can breathe a sigh of relief in a moment of calm. Suddenly, the killer bursts into the scene, showing he’s still viable enough to make a final homicidal plunge.
The killer in our economy was arguably the excess savings built up during the pandemic period. For around 18 months, from the the onset of the lockdowns and attendant economic recession in March 2020 through August of 2021, households rapidly accumulated savings.
Fed’s Collins Says Reaching 2% Inflation Goal May Take Longer
by Steve Matthews
BNN Bloomberg
(Bloomberg) — Federal Reserve Bank of Boston President Susan Collins signaled interest rates will likely need to be held at a two-decade high for longer than previously thought to damp demand and reduce price pressures.
Collins, who noted the lack of disinflationary progress made in 2024, said slower economic growth will be necessary to make sure inflation remains on a sustainable path to the Fed’s 2% goal. She didn’t offer an estimate on when rate cuts may happen.
“The recent upward surprises to activity and inflation suggest the likely need to keep policy at its current level until we have greater confidence that inflation is moving sustainably toward 2%,” Collins said Wednesday at the Massachusetts Institute of Technology.
Argentina Devalues Currency by 50% in ‘Shock’ Measure Against Hyperinflation
Argentina devalued its currency by more than 50 percent Tuesday in a set of “shock” measures aimed at reviving a crumbling economy and tackling triple-digit inflation.
by News Wires
France24
The government of President Javier Milei, a libertarian who swept from obscurity to the top office vowing to chainsaw spending, also announced cuts to generous state subsidies and a halt to all new public construction projects.
In a pre-recorded video message, Economy Minister Luis Caputo took pains to explain to Argentines the causes of their decades of recurrent economic crises, debt, inflation and fiscal deficits.
Annual inflation is currently at 140 percent and poverty levels at 40 percent in Latin America’s third-biggest economy.
The government coffers are also empty, and Milei has repeatedly said: “There is no money.”
PIMCO Adds Bond Exposure Outside the U.S. On Inflation Risks
by Davide Barbuscia
The Globe and Mail
U.S. bond giant PIMCO said on Wednesday it is increasing its bond exposure in developed markets outside the United States as inflation could complicate the shift of the Federal Reserve to lower interest rates.
The $1.9 trillion asset manager expects an easing in central bank policies to bolster bonds in markets such as Australia, Canada, the United Kingdom and the euro zone, but is underweight U.S. fixed income as economic growth in America may continue to be accompanied by rising price pressures.
“The global economic and market outlook suggests diverging paths among regions and sectors,” portfolio managers Erin Browne and Emmanuel Sharef wrote in an asset allocation outlook report.
“In fixed income markets, we’re adding to our investments in select countries outside the U.S. where easier monetary policy this year is likely to boost bonds,” they said.
Lag Effects From the Past Are Driving Inflation Today
by Neil Irwin
Axios
It has been three long years since inflation first ripped upward. But the inflation data in 2024 is, in important ways, being driven by that initial series of economic disruptions that took place in 2021 and 2022.
Why it matters: In one sense, this is good news — it implies that once these lag effects have worked through the system, inflation should settle lower without much additional economic pain.
- As Goldman Sachs economist Ronnie Walker writes in a recent note, “the remaining hot inflation appears to be lagged catch-up inflation, not reheating inflation.”
Yes, but: The bad news is that it implies the inflation of the last few years has, cumulatively, been worse than earlier data implied.
Stocks Slip, Dollar Gains as Market Awaits Inflation Data
by Herbert Lash and Harry Robertson
Reuters.com
NEW YORK/LONDON, May 8 (Reuters) – Global equity markets mostly faltered on Wednesday as investors await fresh inflation data to better assess the likelihood of Federal Reserve interest rate cuts, while the dollar edged higher on expectations of U.S. economic out-performance.
European stocks rose to a record high, boosted by company earnings, but stocks on Wall Street slid as a downbeat forecast from Uber (UBER.N), opens new tab knocked its shares down 5.7% and made the ride-hailing firm one of the biggest decliners on the S&P 500.
The yen weakened for a third day and kept investors wary of intervention from Japanese authorities, while crude oil edged up from near two-month lows. In Europe, the Swedish crown was under pressure after the central bank cut rates as expected and said two more cuts were likely this year if inflation remained mild.
Here’s How Inflation Erodes Your Savings and What You Can Do to Stop It
Inflation wears away your purchasing power, meaning the dollars you save today will be worth less in the future.
by Emily Batdorf
Yahoo! Finance
Inflation has been all over the news over the last couple of years. Even if you’re not tired of hearing about it, you’re probably sick of higher prices at the grocery store and gas pump.
As of March 2024, the U.S. inflation rate was 3.5% for the previous 12 months. Although inflation has cooled following the 40-year high of 9.1% in 2022, it’s still above the Federal Reserve’s long-term target of 2%, which it considers ideal for employment and stable prices.
Not only can inflation negatively impact the economy as a whole, but it can also make it tough for the average consumer to save. Let’s take a closer look at how inflation affects savings and what you can do to combat it.
Sky-High Inflation Forces Argentina to Circulate First 10,000-Peso Notes
New bills worth $11 aim to help population avoid having to carry bricks of cash
by Ciara Nugent
FT
The new notes, worth $11 at the country’s official exchange rate, are five times more valuable than the previous largest note, of 2,000 pesos — which began circulating last year and remains relatively rare — and 10 times more valuable than the more common 1,000-peso note.
Cash payments remain popular in Argentina, where many retailers prefer to receive funds immediately amid chronic economic instability, and others operate off the books. Residents are forced to carry large wads of bills to make small payments, and backpacks of them to make larger ones.