Posted on April 10, 2017
Market Overview: The gold and silver markets are seeing some slight selling pressure today as stocks trade in the green and the risk aversion trade has faded. The risk on/risk off dynamic could potentially see some rapid changes in the coming weeks, however. The possibility of further military action against Syria may remain on investors’ radar. In addition, rising tensions with Russia could also potentially keep perceived safe haven assets from falling too far. In addition to Syria and Russia, things could also possibly escalate with North Korea. The U.S. is now sending over a Naval task force to the region to conduct exercises with South Korea. This is likely in response to ongoing North Korean saber-rattling and may be construed as a show of force.
Key Data Points: There are no major economic data points set for release today. Fed Chairwoman Janet Yellen will be speaking later today at an engagement in Michigan.
The rest of the week is also on the lighter side from a data standpoint. Investors will get the latest readings on Weekly Jobless Claims, MBA Mortgage Applications, PPI, CPI and more.
Outside Markets: Stocks are moving higher in early action today as much of last week’s risk aversion has faded away. The market may remain susceptible, however, to spikes in volatility should any further geopolitical escalation be seen.
Bonds and notes are moving a bit higher today as some degree of risk aversion remains present in the marketplace. A more dovish-sounding Fed has also fueled some buying in the treasury markets and may keep yields from any significant spikes higher in the near-term.
The dollar index is moving slightly lower today but remains above the 100 level.
The Big Picture: With numerous geopolitical issues brewing and the potential for further escalation, the metals markets may remain well-supported in the near-term.
The Fed sticking with its previous forecast of three rate hikes this year may also keep the complex well-bid, and the market appears to have fully discounted the idea of two more hikes this year.
Adding to the potential for increasing risk aversion is concerns over the Trump administration’s ability to implement some of its key legislative proposals. Following the non-vote on a repeal of the Affordable Care Act, investors may become increasingly concerned about the potential for tax reforms and fiscal stimulus. These issues were a major campaign point for the administration, and are likely the primary factors behind the recent rally in stocks.