Gold Falls as Focus Remains on Rate Outlook — Market Talk
0711 GMT - Gold slips as investors weigh inflation risks and the Federal Reserve's monetary policy outlook following last week's rate hike. In early European trading, New York futures are down 0.8% to $4,388 a troy ounce. "Gold remains caught between geopolitical and safe-haven support on one side and restrictive US monetary policy on the other, with the outlook for inflation and the pace of additional Fed hikes likely to remain the key drivers," says Soojin Kim from MUFG. Oil prices are down 2% on Monday on easing concerns over disruptions to Saudi pipeline flows despite attacks by Yemen's Houthi rebels. But growing expectations of a global cycle of interest-rate increases are weighing on gold, as higher rates make the precious metal less attractive relative to interest-bearing assets. ([email protected])0708 GMT - Eurozone government bond yields fall in early trade, tracking U.S. Treasury yields lower, helped by declining oil prices. "Bond markets have reached a critical point. The coming days will show whether the market can stabilize again following initial signs of shifting dynamics," Commerzbank's Rainer Guntermann says in a note. The 10-year German Bund yield falls 5.9 basis points to 3.472%, while the 10-year French OAT yield slides 9.3 basis points to 4.487%, according to Tradeweb. ([email protected])0705 GMT - South Korea's trade surplus could hit a monthly record in September on strong semiconductor exports, Citigroup's Jin-Wook Kim says. The economist expects the surplus to reach $42.70 billion, widening from the prior month's revised $34.79 billion and surpassing the previous record of $35.91 billion set in June. Semiconductor exports hit another record high in the first 20 days of September, with growth accelerating from the same period in August, Kim says. Citi forecasts the country's full-month exports to jump 68.4% from a year earlier and imports to rise 21.0% in September. Citi expects headline inflation to remain at 3.0% in September, following 3.1% in August. ([email protected])0657 GMT - Bitcoin remains elevated above $81,000 after reaching a two-and-a-half-week high overnight. Bitcoin is supported by stronger exchange traded fund inflows, positive regulatory developments and investors closing earlier bets against the cryptocurrency, Zaye Capital Markets analyst Naeem Aslam says in a note. The U.S. Securities and Exchange Commission has introduced a five-year exemption for platforms that facilitate trading tokenized stocks and other securities through blockchain technology. This could strengthen confidence in the wider blockchain ecosystem by reducing uncertainty around how institutional products and trading venues will operate, Aslam says. A more constructive U.S. tone ahead of talks with China could also improve risk appetite, he says. Bitcoin rises 0.5% to $81,520 after reaching as high as $82,050 overnight, LSEG data show. ([email protected])0634 GMT - The dollar rises as it continues to receive support from expectations for further interest rate rises by the Federal Reserve. The Fed voted unanimously to raise rates by 25 bps last week and officials pencilled in at least one more increase by year-end. "Although further U.S. rate hikes had already been largely priced in and longer-term inflation expectations had remained stable near the Fed's inflation target, there apparently remained some doubt as to whether the central bank would actually be willing to raise rates sufficiently quickly and decisively," Commerzbank's Thu Lan Nguyen says in a note. The DXY dollar index rises 0.1% to 100.335 after reaching a seven-week high of 100.564 Friday.([email protected])0617 GMT - U.S. Treasury yields fall in European trading as Brent oil prices slip toward $100 a barrel on a tentative improvement in the geopolitical outlook. "The immediate weakness [in oil] reflects a partial unwinding of the geopolitical risk premium rather than a collapse in underlying demand," Zaye Capital Markets' Naeem Aslam says in a note. President Trump's latest comments suggesting progress with China and leaving room for diplomacy around Iran have reduced some fear of an imminent supply shock, while stronger regional crude flows are also easing pressure on physical markets, he says. The two-year Treasury yield falls 0.8 basis points to 4.735%, while the 10-year Treasury yield drops 2.9 basis points to 4.966%, according to Tradeweb. ([email protected])0606 GMT - Both China and the U.S. are likely to seek to "maintain relative stability" in their relations, although a broad bilateral agreement appears unlikely, according to Goldman Sachs in a research note. Treasury Secretary Scott Bessent and China's economic czar, He Lifeng, will likely discuss artificial intelligence, trade and rare earths before the official meeting between President Trump and Chinese leader Xi Jinping, GS says. "With the Iran war having escalated in recent weeks...the Iran war is likely to be discussed by Presidents Trump and Xi as well," the bank adds. ([email protected])0558 GMT - Jefferies remains negative over France, "as we do not see any political party trying to credibly bring down budget deficits," global economist Mohit Kumar says in a note. Elections will be held in the spring of 2027, "and it is difficult to see fiscal austerity going into elections," he says. Jefferies also has concerns around demand for French government bonds from Asian investors. "Historically Asian investors have been big supporters of France, as for them the potential universe of European government bonds is Germany and France." Italy doesn't yet meet the rating criteria for a bulk of their portfolio, and countries like the Netherlands or Finland don't have large enough issuance sizes, he says. "So a 70-80bp pickup over Germany is a reasonable incentive to buy France during normal times." ([email protected])0538 GMT - Developments in the Middle East will likely remain the key source of uncertainty for bond markets, LBBW's Elmar Voelker says in a note. "The consolidation of long-term bond yields in recent days has coincided with a temporary stabilization of energy prices at high levels," the senior fixed-income analyst says. For the time being, however, LBBW sees no reason to assume that the situation in the Gulf will ease soon. A damaged Saudi oil pipeline might eventually resume partial operations sooner than initially feared, which has slowed the rise in oil prices for now, but efforts to reopen the Strait of Hormuz appear to remain at a standstill, he says. ([email protected])0536 GMT - Malaysia exports are likely to face headwinds in the remaining months of 2026 due to an unfavorable high base from last year, Apex Securities analyst To Zheng Hong says in a note. Structural growth in artificial intelligence, electric vehicles and other related industrial segments could support export growth, while energy exports could provide further support as Malaysia benefits from potential trade diversion linked to Middle East conflicts, he says. However, risks include renewed Middle East tensions disrupting global trade and continued uncertainty over U.S. trade policy. Malaysia also remains exposed to higher U.S. tariffs as a Section 301 investigation into structural excess capacity and production continues, he adds. ([email protected])0532 GMT - Citi raises its U.S. Treasury yield forecasts following the Federal Reserve's September interest-rate hike. It now expects the 10-year Treasury yield at 5.0% at year-end, strategist Jason Williams says in a note. "Typically, we are slow moving with our forecasts to limit chasing price action, but the world is now fundamentally different today compared to the July FOMC," he says. Citi assumes Fed rate hike pricing will remain until year-over-year core PCE starts to normalize next year, Williams says. Citi expects oil prices and the path of core PCE to drive the rates market for the remainder of this year, neither of which paints a good picture for yields in the short-run. ([email protected])1108 GMT - The average U.K. house price rose 0.7% to 367,440 pounds in September, the first monthly increase since May, after a subdued and distracted summer, says Rightmove. The property website says the number of homes for sale is at a 12-year high, while the number of buyers enquiring across the market is 9% lower than this time last year. "With a large crowd of sellers chasing a smaller number of buyers, realism on pricing or a high-quality finish are absolutely key to attracting a buyer and making a sale," Colleen Babcock, Rightmove property expert, says. A home on the market for sale has a 61% chance of successfully finding a buyer at present, Rightmove adds. ([email protected])