Gold, Dollar, and Treasury Yields: Market Recap
The gold price stands at a critical juncture as the weekend approaches, with the US Dollar strengthening as Treasury yields experience an upward tick.
A week full of significant market events may still have more developments in store, given that non-farm payrolls data is scheduled to be released later today.
The Fitch downgrade of the US sovereign debt credit rating from AAA to AA+ initiated a series of risk-off movements across markets starting on Tuesday.
Despite Treasury Secretary Janet Yellen's criticism, characterizing the downgrade as 'arbitrary' and 'outdated', the market reaction unfolded as a pervasive risk aversion.
Adding to concerns regarding US debt, the US Department of Treasury announced on Wednesday their intention to issue US$103 billion next week, an increase from the previous US$96 billion issuance.
The escalation in the cost of Treasury borrowing has been most pronounced at the longer end of the yield curve. Investors are demanding greater compensation for taking on term risk against the backdrop of a deteriorating US government balance sheet over time.
The benchmark 10-year note is edging closer to 4.20%, a level not seen since November of the previous year, after briefly dropping to 4.73% a fortnight ago.
In contrast, the short end of the Treasury yield curve seems firmly anchored, with the market perceiving the Federal Reserve as nearing the end of its tightening cycle. The 2-year bond has traded within the range of 4.85% to 4.95% for the past two weeks.
Benefitting from this period of risk aversion, the US Dollar has continued to gain ground, causing the DXY (USD) index to rebound from its mid-July low.
GBPUSD BUY LIMIT 1930 - 1932🕯
✅ TP1: 1937
✅ TP2: 1942
✅ TP2: 1947
❌ SL: 1926
A week full of significant market events may still have more developments in store, given that non-farm payrolls data is scheduled to be released later today.
The Fitch downgrade of the US sovereign debt credit rating from AAA to AA+ initiated a series of risk-off movements across markets starting on Tuesday.
Despite Treasury Secretary Janet Yellen's criticism, characterizing the downgrade as 'arbitrary' and 'outdated', the market reaction unfolded as a pervasive risk aversion.
Adding to concerns regarding US debt, the US Department of Treasury announced on Wednesday their intention to issue US$103 billion next week, an increase from the previous US$96 billion issuance.
The escalation in the cost of Treasury borrowing has been most pronounced at the longer end of the yield curve. Investors are demanding greater compensation for taking on term risk against the backdrop of a deteriorating US government balance sheet over time.
The benchmark 10-year note is edging closer to 4.20%, a level not seen since November of the previous year, after briefly dropping to 4.73% a fortnight ago.
In contrast, the short end of the Treasury yield curve seems firmly anchored, with the market perceiving the Federal Reserve as nearing the end of its tightening cycle. The 2-year bond has traded within the range of 4.85% to 4.95% for the past two weeks.
Benefitting from this period of risk aversion, the US Dollar has continued to gain ground, causing the DXY (USD) index to rebound from its mid-July low.
GBPUSD BUY LIMIT 1930 - 1932🕯✅ TP1: 1937
✅ TP2: 1942
✅ TP2: 1947
❌ SL: 1926
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