Gold hits fresh record high, bitcoin also higher
The gold price has hit a fresh alltime high, lifted by US election uncertainty and expectations of interest rate cuts.
The spot price of gold has risen to $2,766.52 per ounce, above the previous high set last week, meaning gold has now climbed by a third so far this year.
Tito Iakopa, commercial director at fintech company FlowCommunity, expains:
Gold prices benefited from robust safe-haven demand amid persistent geopolitical tensions, expectations of monetary policy easing, and mounting uncertainty surrounding the US presidential election.
These fundamental factors, combined with strong physical demand, continue to provide support for gold as elevated global risks push prices higher.
#Gold hits a fresh record at $2764 even as the dollar and yields move higher, highlighting its exceptional strength as #USElection2024 nerves continue to take centre stage
— Ole S Hansen (@Ole_S_Hansen) October 29, 2024
Bitcoin is also rallying today, rising above the $70,000 mark for the first time since June. Bitcoin is currently up 3.3% to $71,900, not far from its record high around $73,800 set in March.
Both gold and bitcoin are seen as providing safety from money-printing governments, and from inflation.
Chris Weston, head of research at Pepperstone, says fears of currency debasement are rising:
The fact that we see gold and crypto moving concurrently with a rising US dollar, higher US real rates and nominal US Treasuries, is a clear red flag.
It tells us that the market is becoming progressively concerned, not just with the debt dynamics in the US, but in Japan threats of a new supplementary budget, when the fiscal deficit is already running at 6% of GDP, and the BoJ has cut back on bond buying, could be an issue.
In China, federal government debt levels may be comparatively low relative to many Western government levels, but authorities there are about the break away from their imposed fiscal limits and increase spending to raise animal spirits.
Key events
Closing post
Time to wrap up….(just one more sleep until Budget day!)
Here’s today’s main stories:
Back in the US, the number of job openings has fallen as layoffs increased, signalling a slowdown in the labor market.
The latest JOLTS report shows there were 7.44 million available work positions at the end of September, down from 7.81 million at the end of August.
That’s the lowest reading since early 2021.
Job openings fell in September and were revised down for August, putting the 3-month moving average at its lowest level since the reopening in Spring 2021.
There were fewer than 1.1 posted job vacancies for every worker counted as unemployed in September. pic.twitter.com/eM3PlIhJds
— Nick Timiraos (@NickTimiraos) October 29, 2024
EU adopts extra tariffs on Chinese EVs
Lisa O’Carroll
The EU has announced it will press ahead with tariffs of up 45% on Chinese-made electric vehicles this week after talks with Beijing failed to reach a resolution of the dispute over subsidise cars, my colleague Lisa O’Carroll reports from Dublin.
The tariffs are expected to come into force on Thursday with a top rate of 35.3% slapped on top of vehicles produced by Chinese company SAIC, owner of brands including MG, on top of the existing 10% tariff in imports into the EU.
The decision will become law after publication in the EU’s official journal on Wednesday and will then enter into force from Thursday.
Chinese firms BYD which has launched the Seal and Dolphin brands in Europe will pay lower additional duties of 17% and 18.8%, respectively.
The move is likely to intensify a trade war with China already imposing tariffs on Brandy with investigations opened by Beijing into dairy and pork exports from the EU.
The decisions in tomorrow’s budget could mean that UK debt issuance this financial year is the second largest ever.
Bond dealers are expecting Rachel Reeves to push UK government bond issuance towards £300bn this fiscal year, a roughly 6% increase on the existing target, a Reuters poll has found.
The median forecast among banks that can bid directly at government bond auctions – known as primary dealers – was for gilt issuance of £295bn this financial year, up from £277.7bn under the current plans.
If the Debt Management Office (DMO) sells that many gilts in 2024/25, it would be the second-heaviest year for issuance on record, after the 2020/21 financial year when Britain was hit by the Covid-19 pandemic, Reuters reports.
Much of that debt issuance will be to cover existing bonds which mature this year (and thus need to be rolled over), rather than additional borrowing.
Reuters’ poll found that Britain’s headline budget deficit is likely to end this financial year at around £106bn, ahead of March’s forecast of £87.2bn.
Adidas reaches out-of-court settlement with rapper Ye
After years of legal wrangling, Adidas has reached an out-of-court settlement with rapper Ye to end all legal proceedings between them.
The sportswear brand announced the agreement with the rapper previously known as Kanye West today, adding that no money changed hands in the agreement.
CEO Bjørn Gulden told reporters on a conference call:
“There isn’t any more open issues, and there is no… money going either way, and we both move on….
“There were tensions on many issues, and… when you put the claims on the right side and you put the claims on the left side, both parties said we don’t need to fight anymore and withdrew all the claims.
Adidas cut its ties with Ye two years ago, when it said it “does not tolerate antisemitism” after the rapper was suspended from Instagram and Twitter over offensive posts.
A year later, Gulden lamented the end of the lucrative partnership, saying, “I don’t think he meant what he said.”
According to the Financial Times, today’s agreement means Adidas has received a boost of around €100m to its operating profit after it unwound a previous provision related to the case.
Gulden said that the group would donate to charity an amount equal to its unwound €100m provision, the FT adds.
Gold hits fresh record high, bitcoin also higher
The gold price has hit a fresh alltime high, lifted by US election uncertainty and expectations of interest rate cuts.
The spot price of gold has risen to $2,766.52 per ounce, above the previous high set last week, meaning gold has now climbed by a third so far this year.
Tito Iakopa, commercial director at fintech company FlowCommunity, expains:
Gold prices benefited from robust safe-haven demand amid persistent geopolitical tensions, expectations of monetary policy easing, and mounting uncertainty surrounding the US presidential election.
These fundamental factors, combined with strong physical demand, continue to provide support for gold as elevated global risks push prices higher.
#Gold hits a fresh record at $2764 even as the dollar and yields move higher, highlighting its exceptional strength as #USElection2024 nerves continue to take centre stage
— Ole S Hansen (@Ole_S_Hansen) October 29, 2024
Bitcoin is also rallying today, rising above the $70,000 mark for the first time since June. Bitcoin is currently up 3.3% to $71,900, not far from its record high around $73,800 set in March.
Both gold and bitcoin are seen as providing safety from money-printing governments, and from inflation.
Chris Weston, head of research at Pepperstone, says fears of currency debasement are rising:
The fact that we see gold and crypto moving concurrently with a rising US dollar, higher US real rates and nominal US Treasuries, is a clear red flag.
It tells us that the market is becoming progressively concerned, not just with the debt dynamics in the US, but in Japan threats of a new supplementary budget, when the fiscal deficit is already running at 6% of GDP, and the BoJ has cut back on bond buying, could be an issue.
In China, federal government debt levels may be comparatively low relative to many Western government levels, but authorities there are about the break away from their imposed fiscal limits and increase spending to raise animal spirits.
Full story: Jeremy Hunt calls on government not to release OBR review into his spending plans
Rachel Reeves has hit back at Jeremy Hunt, over his attempt to stop the publication of the OBR’s report into his spending plans as chancellor.
During Treasury questions in parliament, Reeves suggested her predecessor was trying to hide from scrutiny, saying:
“It is important that we don’t deny the seriousness of the situation we face. With the black hole in the public finances, combined with lashing out at independent economic institutions, suggests that he has got more in common with Liz Truss and Kwasi Kwarteng than perhaps we thought”.
“I watched my party lurch towards an ideological extreme and deny reality, and as a result we spent years in opposition. The shadow chancellor risks taking his party down the same path.”
House price growth across the US has slowed.
Prices rose at an annual rate of 4.2% in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, down from 4.8% in July.
On a monthly basis, prices dipped by 0.1%.
Case-Shiller’s 20-city adjusted index rose 0.4 percent on the month in August, seasonally adjusted, while the unadjusted annual rate of increase eased yet again to 5.2 percent in August from 5.9 percent in July, 6.5 percent in June and 6.9 percent in May. pic.twitter.com/SNuSgH3z48
— Econoday, Inc. (@Econoday) October 29, 2024
A narrower index, tracking 20 large US cities, shows prices rose by 5.2% in the year to August – lead by New York (+8.1%), Las Vegas (+7.3%) and Chicago (7.2%), while Denver lagged at the back with just 0.7% growth.
Julia Kollewe
Pfizer has raised its full-year profit and revenue forecasts, pointing to higher-than-expected demand for its antiviral Covid-19 treatment Paxlovid and its Covid vaccine Comirnaty.
The US pharmaceutical giant lifted its 2024 revenue forecast to between $61bn and $64bn and its earnings per share estimate to between $2.75 and $2.95. It has struggled with a sharp drop in revenues from its Covid jab and antiviral pill Paxlovid since the pandemic, but demand far outstripped expectations in the latest quarter.
Chief executive Albert Bourla highlighted “exceptional demand” for the New York-based drugmaker’s cancer drugs, and said the firm had “delivered on heightened demand for Paxlovid during the recent Covid-19 wave”.
The drug brought in $2.7bn of revenue in the third quarter, compared with analysts’ expectations of $456m, while the Comirnaty jab, which Pfizer makes with its German partner BioNTech, generated quarterly sales of $1.4bn, far ahead of forecasts of $870m.
Overall, third-quarter sales grew by 31% to $17.7bn, and by 14% excluding Covid products.
Bourla added:
“The demand for Paxlovid seems to have stabilised at the current levels and appears to be closely correlated with each wave of Covid-19.”
The company is under pressure from the activist investor Starboard Value, a New York-based hedge fund founded in 2002, and has done two rounds of cost cutting to save $5.5bn by 2027, as well as deals, such as the $43bn acquisition of cancer specialist Seagen last year.
Pfizer shares have risen more than 3% in pre-market trading.
Back in the bond market, US government debt is weakening in value.
With prices falling a little today, the yield on 10-year US Treasury bonds has risen to 4.32% from 4.28% last night, a rise of 4 basis points.
That’s its highest level since early July.
US Treasury prices have been hit by fears that US interest rates may not be cut as quickly as expected, due to sticky inflation.
UK bond yields are rising a little higher too, with German and French debt also weakening….
The Uk government has pushed back against former chancellor Jeremy Hunt’s complaints that the Office for Budget Responsibility (OBR) will publish its review of his spending plans on the same day as the Budget, tomorrow.
Asked if the OBR was being used as a political tool, following Hunt’s criticism (see earlier post), Sir Keir Starmer’s spokesman told reporters:
“No, the Prime Minister is clear that this Government is going to back the independent OBR, not trash it.
“The answer is not to blame the referee, face up to the challenges we faced and be honest about the trade-offs and choices the Government face, not pretend they don’t exist.
“That’s why the Government is strengthening the OBR through the Budget Responsibility Act to ensure that it’s never sidelined again, like we saw during the mini budget.
“The Government has been up front about the black hole of the nation’s finances and it fully backs the OBR and the independent scrutiny it provides.”
Santander UK delays results as it considers landmark car loan ruling
Kalyeena Makortoff
Santander UK has delayed the release of its third-quarter results at the last minute as it scrambles to review last week’s landmark court judgment into car finance misselling that some analysts say could cost the lender £1.1bn.
The bank was scheduled to release its latest quarterly earnings report on Tuesday morning, alongside those of its Spanish parent company, Banco Santander. The British arm, however, announced on Monday evening that it was withholding its report while it reviewed Friday’s court of appeal ruling into commission payments on car loans.
The judgment, which said it was unlawful for lenders to have paid a commission to car dealers without the borrowers’ knowledge, could influence an ongoing investigation by the Financial Conduct Authority and ultimately force lenders such as Santander to pay customers billions of pounds in compensation.
It said:
“It is not practicable to reliably estimate at this point in time the extent of any potential financial impact.
However, Santander UK Group Holdings plc is taking time to consider the judgment and the potential exposure it creates for the Santander UK Group.”
Fast food chain McDonald’s has reported a drop in sales in the last quarter, driven by weaker demand outside America.
Fresh from giving president Trump a “shift” last week, McDonald’s has reported a 1.5% drop in global comparable sales for the third quarter of the year.
Although sales in the US rose by 0.3%, sales fell in international markets such as France, the UK and China, while “the continued impact of the war in the Middle East” also hit sales.
McDonald’s CEO Chris Kempczinski says:
“We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending.
“McDonald’s will continue to follow our Accelerating the Arches playbook to drive long-term growth globally and win in this environment.”
McDonald’s was hit by an E coli outbreak in the US earlier this month, with report suggesting that fresh onions are the most likely source of the bacteria.
More than 1,000 Ford administrative staff to strike tomorrow
More than 1,000 Ford employees are to go on strike tomorrow, in a dispute about pay and contract changes.
The Unite union has announced that administrative workers in Dunton, Stratford, Dagenham, Daventry and Halewood will walk out for 24 hours.
They say Ford has failed to offer its workers a permanent pay increase, and is only offering many of its office workers a one-off payment for 2024.
Unite general secretary Sharon Graham says:
“Despite its huge wealth, Ford has launched a direct attack on its office workers’ pay and terms and conditions. The only reason for this is corporate greed.
“The company’s appalling treatment of our members has simply made them more determined to fight against these cruel and unnecessary changes and for a fair pay rise. They have Unite’s total and unflinching support as they strike for a better deal.”
Former chancellor Jeremy Hunt is still trying to prevent a report into the £22bn “black hole” left for the Labour government being released tomorrow.
Hunt has written to the cabinet secretary, arguing it would be wrong for the Office for Budget Responsibility to release its review into whether it was misled by the previous government on budget day.
He claims the OBR is straying into political territory with the timing of its review into the “adequacy of the information and assurances” on departmental spending the Treasury provided for the March budget (when he was chancellor).
Hunt is also unhappy that the OBR appears to have shown the review to the new government, while not consulting him during its inquiry.
Hunt is asking Simon Case to assess whether it is acceptable for the OBR to publish the review on budget day.
He says:
The OBR must be politically impartial and the public and markets need to know that it is holding the government to account without fear or favour.
I have written to the Cabinet Secretary to ask why basic rules of fairness are not being followed. If we are to keep the OBR out of the political fray he needs to act before it is too late.
The OBR must be politically impartial and the public and markets need to know that it is holding the government to account without fear or favour.
I have written to the Cabinet Secretary to ask why basic rules of fairness are not being followed. If we are to keep the OBR out of… pic.twitter.com/iUsDEQTduA
— Jeremy Hunt (@Jeremy_Hunt) October 29, 2024
Hunt has already complained to the OBR, last week, and was rebuffed on Sunday:
Ireland’s GDP grew 2% in last quarter
Just in: Ireland’s economy returned to growth in the last quarter, mainly due to the multinational companies based in the Republic.
Irish GDP rose by 2% in July-September, new data from the Central Statistics Office shows.
This was “driven mainly by an increase in the multinational dominated sectors”, the CSO reports.
Enda Behan, CSO statistician, explains:
This moderate growth was driven by an increase in the multinational dominated sectors of Industry and Information & Communication in Q3 2024. GDP is estimated to have fallen by 1.2% when compared with Q3 2023.
Results for year-to-date 2024 (January-September 2024) compared with the equivalent period of 2023 show GDP declining by 3.3%.
Back in the financial markets, the interest rates on UK benchmark government debt is very slightly higher today.
The yield (or rate of return) on 10-year UK gilts has nudged up to 4.273%, up from last night’s close of 4.257% (so a small increase, of under two basis points).
Yesterday, it touched 4.284%, the highest since just before the general election at the start of July.
10-year gilt yields are still below the levels hit in the aftermath of the 2022 mini-budget chaos, and also lower than the peaks seen in 2023.
