A move lower in bond yields has given equity markets a sorely needed sigh of relief despite the looming shadow of the Core PCE Price Index release later today. Though bond yields have performed slightly better than last month, the Index will present data that either confirms or damns the current risk assets that have been fighting to survive.
After just missing a 16-year high, US GDP data has shown yields to be marginally smaller than expected for September. The retreat in yields has allowed risk assets some breathing space, but with the 10-year note still above the 4.5% level, investors are anxious about a downward spiral in October due to Index uncertainty.
Market analysts and FOMC officials will be watching the Core PCE Price Index to spot any burgeoning signs of core pressures rising, which could potentially increase the odds of a November hike from the US Federal Reserve.
Gold has been on a steady decline this month, with the price heading south as demand for the precious metal dries up. The US dollar, however, is currently receiving a good flow of bonds, with investors showing cautiousness toward the zero yield on offer from gold. When the higher yield rates return, investor interest is sure to surge. That being said, the current gold market is performing at a lesser rate than it should be.
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Oil pulled back from a yearly high, although the data for this year still suggests that short-term gains will increase, albeit cautiously. Oil prices are at the mercy of the upcoming Chinese PMI data as well as domestic travel figures for the autumn period domestic travel. With traders still trying to assess whether the pit of the downturn has already been reached, it’s a waiting game to see if the prices and profit remain stable.
