Gold Reaches New Record High Amid 'Trump Trade'; Crude and Mega-Caps Also See Gains
'Soft' Survey Data and Inflation Expectations
The 'Soft' Survey data from the Philly and Richmond Feds exceeded expectations. However, inflation expectations are once again on the rise. Furthermore, current and expected spending on software and equipment, including AI, is experiencing a significant drop.
Rate-Cut Expectations and Election Bets
The increase in Prices Paid and Received overshadowed the downside in capex from the surveys, which led to a decrease in rate-cut expectations. With the election approaching, the market's focus is now primarily on this event, with most bets being placed on Trump.
Prediction Markets and Polls
Prediction markets are heavily favoring Trump, and even the polls are now showing an upward trend in his favor. Despite a late-day selloff, the Nasdaq and The Dow managed to finish the day in the green, thanks to an afternoon drift higher.
Mega-Cap Tech and Treasuries
Mega-Cap tech achieved a new record high, preventing the day from ending on a sour note. Treasuries were mixed to flat, with none of the curve ending more than 1bps different from close to close. The long-end was slightly more bid.
The Dollar, Gold, and Silver
The dollar continued its upward trend, albeit modestly. Gold, on the other hand, reached another record high, trading within pennies of $2750. Silver also continued to outperform gold.
Crypto and Crude Prices
Crypto remained relatively stable, with Bitcoin chopping around $67,000. Crude prices rallied, with WTI rising above $70.
Global Liquidity and Bitcoin
As gold continues to accelerate, global liquidity, represented by global M2, has started to decline. However, Bitcoin has only just begun to keep pace with the surge.
Commodities and Inflation
The consensus is that all roads lead to inflation. Commodities are currently significantly under-owned, leading to a bullish outlook on gold, Bitcoin, and commodities in general.
Bottom Line
The current market trends indicate a shift towards inflation, with commodities such as gold and Bitcoin being favored. As the election approaches, the market is heavily favoring Trump, which could have significant implications for future economic trends. What are your thoughts on these developments? Do you agree with the market's predictions and the potential for increased inflation? Share this article with your friends and discuss these intriguing market trends. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.
