Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1153.10 up $24.90 (comex closing time)
Silver $15.52 up 34 cents.
In the access market 5:15 pm
Gold $1153.50
Silver: $15.58
In the access market yesterday, gold broke above the huge resistance at $1130.00. As physical gold continues to travel eastbound, the backwardation of gold in both the LMBA and the comex(indicating scarcity) set in motion today for the gold price to break well above the 1130 dollar level. You will recall that $1130 was the price that the bankers raided in November for 50.00 dollar loss. It was a daunting wall to climb but finally gold pierced that level much to the chagrin of our bankers. We now head for the 1200 dollar level!
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a poor delivery day, registering 0 notice for 100 ounces Silver saw 0 notices for nil oz
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 227.43 tonnes for a loss of 75 tonnes over that period.
In silver, the open interest tumbled by 3895 contracts despite the fact that silver was up in price by 31 cents yesterday.Something really spooked our shorts as they ran to the hills to cover. The total silver OI now rests at 169,650 contracts In ounces, the OI is still represented by .848 billion oz or 121% of annual global silver production (ex Russia ex China).
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rests tonight at 437,618. We had 0 notice filed for nil oz today.
We had a huge addition of 3.57 tonnes at the GLD today / thus the inventory rests tonight at 675.44 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no changes in silver inventory at the SLV tune of / Inventory rests at 324.968 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver fall by 3895 contracts down to 169,650 despite the fact that silver was up by 31 cents in price with respect to yesterday’s trading. The OI for gold rose by 4,890 contracts to 437,618 contracts as gold was up by $11.00 yesterday. We still have 16.643 tonnes of gold standing with only 14.78 tonnes of registered gold in the dealer vaults ready to satisfy that which stands.
(report Harvey)
2.Gold trading overnight, Goldcore
(/Mark OByrne)
3. One story on China where last night the country had considerable rain and now toxic cyanide seems to be surfacing
(zero hedge)
4, Greece calls for an election
(zero hedge)
5. The Turkish lira plunges to all time lows as this country is in total turmoil
(zero hedge)
6 Trading of equities/ New York
(zero hedge)
7. One oil related stories, including a very important showing the fragility of 5 oil producing nations
(Nick Cunningham/Oil Price.com)
8.Today, 3 countries in peril tonight
i) Kazakhstan
ii Brazil
iii Turkey
(3 stories/zero hedge)
9. In the agreement Iran is allowed to self inspect
(what a complete farce)
(zero hedge)
(zero hedge)
9. USA stories:
Philly Mfg index falters
Conference board of leading indicators falters again
Initial jobless claims rise
Bellwether Caterpillar reports a 32 consecutive decline in monthly sales.
Physical stories:
i) Gold/silver surge today
(zero hedge)
ii Court orders the return of all gold/silver/platinum Liberty coins to their rightful owners. Court states that only contraband can be withheld.
(courtesy Coinworld/GATA)
iii) John Lee talks about the Chinese devaluation and why he thinks gold/silver will rise
(John Lee)
and other stories…../
Let us head over and see the comex results for today.
The total gold comex open interest rose from 432,728 up to 437,618, for a gain of 4890 contracts as gold was up $11.00 with respect to yesterday’s trading. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest: 1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter continued with its decline in gold ounces standing. What is also interesting is that the LBMA gold is continually witnessing a 7.00 plus premium spot/next nearby month as gold is now in backwardation over there. We are now in the contract month of August and here the OI fell by 123 contracts falling to 1525 contracts. We had 1 notice filed yesterday and thus we lost 122 contracts or 12,200 additional ounces will not stand for delivery. The next delivery month is September and here the OI rose by 195 contracts up to 2534. The next active delivery month is October and here the OI rose by 900 contracts up to 27,925. The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 164,189. The confirmed volume on yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 171,785 contracts.
Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI fell by 3895 contracts from 173,545 down to 169,650 despite the fact that silver was up by 31 cents in price on yesterday . We continue to have some short covering as our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of August and here the OI fell by 0 contracts remaining at 16. We had 0 delivery noticse filed yesterday and thus we lost 0 contracts or an additional nil ounces will stand for delivery in this non active August contract month. The next major active delivery month is September and here the OI fell by 7069 contracts to 63,236. The estimated volume today was excellent at 53,928 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 78,883 contracts which is excellent in volume. We had 0 notices filed for nil oz.
August contract month:
initial standing
August 20.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
5883.45 oz (Manfra.Scotia
183 (kilobars)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
0 contract (nil oz)
No of oz to be served (notices)
1525 contracts (152,500 oz)
Total monthly oz gold served (contracts) so far this month
3826 contracts(382,600 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month
558,823.6 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
we had 2 customer withdrawal
i) out of Manfra: 96.45 oz (3 kilobars)
ii) out of Scotia: 5787.000 oz (180 kilobars)
total customer withdrawal: 5,883.45 oz
We had 0 customer deposits:
Total customer deposit: nil oz
We had 1 adjustment
i) out of Scotia:
14,580.97 oz was adjusted out of the dealer and into the customer account of Scotia and this no doubt would be a settlement.
JPMorgan has 7.1966 tonnes left in its registered or dealer inventory. (231,469.56 oz) and only 741,358.273 oz in its customer (eligible) account or 23.05 tonnes
.
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
To calculate the total number of gold ounces standing for the August contract month, we take the total number of notices filed so far for the month (3826) x 100 oz or 382,600 oz , to which we add the difference between the open interest for the front month of August (1525) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the August contract month:
No of notices served so far (3826) x 100 oz or ounces + {OI for the front month (1525) – the number of notices served upon today (0) x 100 oz which equals 535,100 oz standing so far in this month of August (16.643 tonnes of gold).
We lost 122 contracts or an additional 12,200 ounces will not stand for delivery. Thus we have 16.643 tonnes of gold standing and only 14.78 tonnes of registered or dealer gold to service it. Today, again, we must have had considerable cash settlements.
Total dealer inventory 475,382.519 or 14.78 tonnes
Total gold inventory (dealer and customer) =7,311,980.125 or 227.43 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 227.43 tonnes for a loss of 75 tonnes over that period.
end
And now for silver
August silver initial standings
August 20 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
10,828.300 oz (Brinks, Delaware)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
125,440.910 oz (Delaware,CNT)
No of oz served (contracts)
0 contracts (nil oz)
No of oz to be served (notices)
16 contracts (80,000 oz)
Total monthly oz silver served (contracts)
59 contracts (295,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
85,818.47 oz
Total accumulative withdrawal of silver from the Customer inventory this month
7,559,380.5 oz
total dealer deposit: nil oz
Today, we had 0 deposits into the dealer account:
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 2 customer deposit:
i) Into Delaware: 124,441.91 oz
ii) Into CNT: 999.00000 oz ????
total customer deposits: 125.440.910 oz
We had 2 customer withdrawals:
i) Out of Brinks; 9836.60 oz
ii) Out of Delaware: 991.70
total withdrawals from customer: 10,828.300 oz
we had 1 adjustment and a strange one:
we had a counting error:
i) an addition error whereby exactly 60.0000 oz was added to HSBC??
Total dealer inventory: 55.871 million oz
Total of all silver inventory (dealer and customer) 171.073 million oz
The total number of notices filed today for the August contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in August, we take the total number of notices filed for the month so far at (59) x 5,000 oz = 295,000 oz to which we add the difference between the open interest for the front month of August (16) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the August contract month:
59 (notices served so far)x 5000 oz + { OI for front month of August (16) -number of notices served upon today (0} x 5000 oz ,= 375,000 oz of silver standing for the August contract month.
we neither lost nor gained any silver ounces standing in this non delivery month of August.
for those wishing to see the rest of data today see:http://www.harveyorgan.wordpress.comorhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.There is now evidence that the GLD and SLV are paper settling on the comex.***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:i) demand from paper gold shareholdersii) demand from the bankers who then redeem for gold to send this gold onto Chinavs no sellers of GLD paper.
And now the Gold inventory at the GLD:
August 20/2015:a huge addition of 3.57 tonnes of gold into the GLD/Inventory rests tonight at 675.44 tonnes
August 19/no changes in inventory/GLD inventory rests tonight at 671.87 tonnes
August 18.2015: no changes in inventory/GLD inventory rests tonight at 671.87 tonnes
August 17.2015: no changes in inventory/GLD inventory rests tonight at 671.87 tonnes
August 14.2015: no changes in inventory/GLD inventory rests tonight at 671.87 tonnes
August 13.2015:/no changes in inventory/GLD inventory rests tonight at 671.87 tonnes
August 12./ a huge deposit of 4.18 tonnes of gold into the GLD/Inventory rests at 671.87 tonnes
August 11.2015: no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes August 10/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes
August 7./no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes August 6/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes August 5.we had a huge withdrawal of 4.77 tonnes from the GLD tonight/Inventory rests at 667.93 tonnes
August 4.2015: no change in inventory/rests tonight at 672.70 tonnes
August 3.2015: no change in inventory at the GLD./Inventory remains at 672.70 tonnes
August 20 GLD : 675.44 tonnes
end
And now SLV:
August 20.2015:/no changes in inventory at the SLV/Inventory rests tonight at 324.698 million oz
August 19/no changes in inventory at the SLV/Inventory rests tonight at 324.698 million oz
August 18.2015: no changes in inventory at the SLV/Inventory rests tonight at 324.968 million oz
August 17.2015: no changes in inventory at the SLV/Inventory rests tonight at 324.968 million oz.
August 14/no changes in inventory at the SLV/Inventory rests at 324.968 million oz.
August 13.2013: a huge withdrawal of 1.241 million oz/Inventory rests tonight at 324.968 million oz
August 12.2015: no change in SLV inventory/rests tonight at 326.209 million oz.
August 11./ no changes in SLV inventory/rests tonight at 326.209 million oz.
August 10: no changes in SLV inventory/rests tonight at 326.209 million oz.
August 7.no changes in SLV/Inventory rests this weekend at 326.209 million oz
August 6/no changes in SLV/inventory rests at 326.209 million oz
August 5/ a small withdrawal of 142,000 oz of inventory leaves the SLV/Inventory rests tonight at 326.209 million oz
August 4.2015: a small withdrawal of 476,000 oz of inventory at the SLV/Inventory rests at 326.351 million oz August 3.2015; no change in inventory at the SLV/inventory remains at 326.829 million oz
August 20/2015: tonight inventory rests at 324.968 million oz
end
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 10.5 percent to NAV usa funds and Negative 10.4% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.8%
Percentage of fund in silver:37.9%
cash .3%( August 20/2015).
2. Sprott silver fund (PSLV): Premium to NAV remains at -0.32%!!!! NAV (August 20/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – .33% to NAV August 20/2015)
Note: Sprott silver trust back into negative territory at-0.32% Sprott physical gold trust is back into negative territory at -.33%Central fund of Canada’s is still in jail.
Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:
SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64) Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis. Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer. Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer. * * * * *
>end
And now for your overnight trading in gold and silver plus stories on gold and silver issues:
(courtesy/Mark O’Byrne/Goldcore)
Gold: Best defence in a genuine currency war, says Frisby
By Mark O’ByrneAugust 20, 2015No Comments
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Every investment needs a good story if it’s going to fly.
“The internet is going to change the world”, drove the dotcom bubble. “They’re not building any more land,” drove buy-to-let. “The Chinese want the things we take for granted – and there are just so many of them,” drove commodities.
One of the reasons for gold’s demise is that its story lost its magic. It no longer seemed relevant.
I’ve said before that gold needs a new narrative. I didn’t think it would come so quickly.
But I think one may be starting to form.
The big financial story of last week was China’s repeated devaluation of the yuan. In just about every related article – and in many of the headlines – the phrase ‘currency wars’ has appeared. It’s all over the papers, TV and the internet.
Read the full article by Dominic Frisby on MoneyWeek here.
Gold in GBP – 1 Year
DAILY PRICES
Today’s gold prices: USD 1,137.95, EUR 1,019.80 and GBP 7128,54 per ounce.
Yesterday’s gold prices: USD 1,123.20, EUR 1,017.71 and GBP 716.90 per ounce.
(LBMA AM)
Yesterday, gold finished trading with a gain of 1.34% or $15.00, closing at $1,132.70/oz. Silver rose 2.55% or $0.38, closing at $15.26/oz.
Download Essential Guide To Storing Gold Offshore
BREAKING NEWS
Gold climbs to 5-week high as Sept Fed hike hopes fizzle – Reuters
Gold Holds Gains After Biggest Advance in Three Months on FOMC – Bloomberg
Asian shares slide; dollar loses edge on Fed minutes – Reuters
Vietnam devalues dong to protect exports, offset China’s yuan action – Reuters
Cash-Strapped Venezuela May Sell Gold Reserves, Citigroup Says – Bloomberg
IMPORTANT COMMENTARY
Gold: the best defence in a genuine currency war? – MoneyWeek
Video: Threat to Bitcoin with Its “Y2K” Moment – Bloomberg
HSBC expects gold price to be up 10% by the end of 2015 – GoldSeek
Doug Casey on Why You Should Go to Africa Instead of College – Casey Research
World Skills winners show university not the only way to a brilliant career – David McWilliams
Click on News and Commentary
Download Essential Guide To Storing Gold Offshore
end
The following was brought to your attention yesterday but it is worth repeating:
(courtesy Wiseman/Associated Press/GATA)
IMF decides China must wait to join exclusive currency club
Submitted by cpowell on Thu, 2015-08-20 11:13. Section: Daily Dispatches
By Paul Wiseman
Associated Press
via Yahoo News
Wednesday, August 20, 2015
WASHINGTON — China must wait until at least next year to join an exclusive club of the world’s top currencies, the International Monetary Fund said Wednesday.
The IMF’s board voted to leave unchanged until Sept. 30, 2016 a basket of currencies used in IMF operations. China, world’s second-biggest economy, had wanted the IMF to include its currency, the yuan, in the basket along with the U.S. dollar, euro, British pound, and Japanese yen starting Jan. 1.
Unlike the other currencies, the yuan does not trade freely. China sets a daily target and lets the yuan trade 2 percent higher or lower. Last week, Beijing devalued the yuan and said it would give market forces more say in determining the exchange rate — a move the IMF praised as a step in the right direction. …
… For the remainder of the report:
http://finance.yahoo.com/news/imf-china-must-wait-join-172825178.html
end
As I promised you yesterday, $1130 gold was a key resistance level. Once this level was penetrated it was game over for our bankers. The fun begins;
(courtesy zero hedge)
Gold Surges Above Key Technical Level, Silver Regains Last Week’s Losses
Gold has filled the gap from the mid-July China crash and broken above its 50-day moving average for the first time since June. Silver is surging once again this morning reoundtripping to last week’s pre-flush highs…as The US Dollar limps lower.
Gold breaks above the 50DMA for first time since June…
Recovering all of the flash crash losses…
And Silver roundtrips from last week’s plunge…
Charts: Bloomberg
end
John Lee: Another Chinese devaluation indicated
Submitted by cpowell on Thu, 2015-08-20 11:39. Section: Daily Dispatches
7:38a ET Thursday, August 20, 2015
Dear Friend of GATA and Gold:
Mining entrepreneur John Lee, who travels to China often, notes a decline in China’s foreign exchange reserves and wonders if a run on the Chinese currency has begun and if an even bigger devaluation is in the offing. Lee’s analysis is headlined “RMB Devaluation, Chinese Foreign Reserve, and Gold Price” and it’s posted at Prophecy Development’s Internet site here:
http://www.prophecydev.com/rmb-devaluation-chinese-foreign-reserve-and-g…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
end
The court orders silver and gold coins must be returned to its original owners. The judge ruled that only contraband could be withheld.
(courtesy Coin World/GATA)
Feds to return Liberty Dollars seized in 2007
Submitted by cpowell on Thu, 2015-08-20 16:31. Section: Daily Dispatches
By Paul Gilkes
Coin World, Sidney, Ohio
Wednesday, August 19, 2015
Millions of dollars’ worth of silver, gold, platinum, and copper Liberty Dollar medallions and related property seized by federal authorities in 2007 will be returned to their owners, according to court documents.
The return of that property, however, is being delayed until all petitions filed seeking return of the property have been completely processed and any appeals finalized.
In documents filed Aug. 14 in U.S. District Court for the Western District of North Carolina in Statesville by Acting U.S. Attorney Jill Westemoreland Rose, 265 of the 302 petitions filed for the return of property were approved. …
… For the remainder of the report:
http://www.coinworld.com/news/precious-metals/2015/08/federal-government…
end
And now your overnight Thursday morning trading in bourses, currencies, and interest rates from Europe and Asia:
1 Chinese yuan vs USA dollar/yuan rises slightly this time to 6.3875/Shanghai bourse: red and Hang Sang: red
Surprisingly, last week, officially, China added another 19 tonnes of gold to its official reserves now totaling 1677.
2 Nikkei down 189.11 or 0.94%
3. Europe stocks all in the red /USA dollar index down to 96.21/Euro down to 1.1177
3b Japan 10 year bond yield: lowers at .365% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.34
3c Nikkei still just above 20,000
3d USA/Yen rate now just below the 124 barrier this morning
3e WTI 40.69 and Brent: 46.40
3f Gold up /Yen down
3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil down for WTI and down for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund slightly falls badly to .594 per cent. German bunds in negative yields from 4 years out. (the 5 yr bund is trading at 0% rate)
Except Greece which sees its 2 year rate rises to 11.13%/Greek stocks this morning down by 2.83%: still expect continual bank runs on Greek banks /
3j Greek 10 year bond yield rises to : 9.33%
3k Gold at $1138.19 /silver $15.40
3l USA vs Russian rouble; (Russian rouble d0wn 9/10 in roubles/dollar) 67.49,
3m oil into the 40 dollar handle for WTI and 46 handle for Brent/Saudi Arabia increases production to drive out competition.
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar.
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9632 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0765 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p Britain’s serious fraud squad investigating the Bank of England/
3r the 4 year German bund remains in negative territory with the 10 year moving closer to negativity to +.595%
3s The ELA lowers to 89.7 billion euros, a reduction of .7 billion euros for Greece. The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes again and agrees to more austerity even though 79% of the populace are against.
4. USA 10 year treasury bond at 2.09% early this morning. Thirty year rate below 3% at 2.777% / yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Dazed And Confused: Futures Tumble Below 200 DMA, Oil Near $40, Soaring Treasurys Signal Deflationary Deluge
It is unclear what precipitated it (some blamed China concerns, fears of rate hikes, commodity weakness, technical picture deterioration although it’s all just goalseeking guesswork) but overnight S&P futures followed yesterday’s unexpected slide following what were explicitly dovish Fed minutes, and took another sharp leg lower down by almost 20 points, set to open below the 200 DMA again, as the dazed and confused investing world reacts to what both the Treasury and Oil market signal is a deflationary deluge. Indeed, oil is about to trade under $40 while the 10Y Treasury was last seen trading at 2.07%. Incidentally, the last time oil was here in March of 2009, the Fed was about to unleash QE 1. This time, so called experts are debating if the Fed will hike rates in one month or three.
Not helping matters was China’s national plunge protection team, after Chinese shares fell over 3% and the Shanghai Composite closed a mere eight points above its 200-day moving average. This happens the same day China’s central bank injected the most funds in open-market operations since February as intervention to prop up the yuan strained the supply of cash and drove a key money-market rate to a four-month high. Ironically the “targeted” liquidity injections actually dampened expectations of further monetary easing.
According to Bloomberg, the People’s Bank of China pumped a net 150 billion yuan ($23 billion) into the financial system this week, data compiled by Bloomberg show. That’s the most since before the Chinese New Year holiday, when seasonal demand for cash spikes. The authorities are providing another 170 billion yuan through loans and an auction of deposits. Yuan purchases risk driving borrowing costs higher at a time of slowing economic growth unless the monetary authority releases additional cash.
“Front-end rates have been edging up, likely resulting from tighter liquidity conditions amid intervention,” said Frances Cheung, head of Asia ex-Japan rates strategy at Societe Generale SA in Hong Kong. “The PBOC needs to step up its open-market operations to offset the liquidity withdrawal on the foreign-exchange side.”
And there again is another unintended consequence of central planning as the PBOC now scrambles to fight the consequences of its own actions.
Perhaps sensing that the micromanagement of markets is failing and central banks everywhere are rapidly losing control, Asian equity markets were a sea of red and traded in negative territory following the weak lead from Wall Street as the slump in the energy complex and concerns over China continues to weigh on global sentiment. Subsequently, energy names dragged the Nikkei 225 (-0.9%) and ASX 200 (-1.7%) lower amid the tumble in crude prices. Japan’s Topix fell 1.5% and is now down 4.6% from the multi year high it achieved just eight trading days ago. The MSCI Emerging Market Index fell to its lowest close since October 2011.
There was also speculation in Chinese press that China may set an average GDP target of 6.5% for the 2016-2020 period. Hang Seng (-1.7%) had seen technical selling as the index entered bear market territory having fallen 20% from its April peak and approaches a ‘death cross’ for the 1st time in a year with the 50 DMA in close proximity to breaching below the 200DMA. JGBs rose amid spill-over buying in USTs and weakness in Japanese equities.
Dovish interpretation of the FOMC minutes failed to lift investor sentiment , which instead remained depressed as market participants focused on the ever growing risks stemming from China. As a result, stocks in Europe (Euro Stoxx: -0.9%) traded lower since the get-go, with energy names underperforming on the sector breakdown amid the ongoing slump on energy and base metals. The downside price action in futures markets also saw the e-mini S&P break below the 200 DMA at 2064. High profile US earnings today include Salesorce.com, Gap and HP.
Also of note, a Greek Finance Ministry official has stated that Greece have repaid EUR 3.4bIn owed to the ECB after receiving EUR 13bIn in the first tranche of their ESM funding following the bailout approval, while Greek press suggests PM Tsipras is to meet with key advisers at 1400 local time (1200BST) and will then decide when to go for early elections after rumours in Greece that Tsipras could hold a snap election on September 13th or 20th.
In fixed income, weakness in equities has filtered through to strengthen core fixed income products with Bund Sep’15 futures higher by around 40 ticks heading into the North American crossover. As such the lower yields led to unfavourable rate flows, which together with less than impressive UK retail sales (Inc Auto Fuel (Jul) M/M 0.10% vs. Exp. 0.40%) weighed on GBP, which in turn has underperformed its major peer. This, together with the consequent re-pricing of Fed rate lift-off expectations following the FOMC minutes, saw EUR/USD trade firmer.
Moving to FX, the focus remained on commodity linked (AUD,CAD, etc) and EM currencies (TRY, KTZ, etc) which continued to come under pressure on the back of the ongoing rout in energy and base metals markets, with the price volatility rising following the recent CNY devaluation by the PBOC. On that note, the FT noted that the capital outflow from EM states stands at around USD 1trl over the past 13 months.
On that note, the ongoing reluctance by the Turkish central bank to counter the weakness in TRY, together with the ongoing political and geo-political concerns saw Turkish Lira (TRY) fall to its weakest level on record vs. USD to 2.9853. Also, the Kazakhstan Tenge (KZT) was the notable underperformer (lower by 28% vs. the USD) after the Kazakh central bank free floated its currency overnight.
Elsewhere, the South Korean Security Council is convened at the moment with military at the highest alert level following an exchange of Artillery fire at the border with North Korea, which comes after 2 South Korean soldiers were injured on North Korean Land mines at the border earlier in August and in retaliation to this, South Korea began announcing propaganda over the border using loud-speakers.
The energy complex has seen continued weakness throughout the Asian and European sessions with WTI Sep’15 futures firmly below the USD 41/bbl handle ahead of the expiry at 1930BST/1330CDT. Also of note, today sees the EIA NatGas storage change, which is expected at 59. Elsewhere, metals have seen strength on the back of the FOMC minutes and USD weakness, with gold printing its highest level in 5 weeks.
Going forward, market participants will get to digest the release of the
latest US weekly jobs report, Philadelphia Fed and existing home sales.
In summary: European shares remain close to intraday lows with the financial services and personal & household sectors underperforming and basic resources, retail outperforming. Kazakhstan’s Tenge falls 23% to all-time low against the dollar as country scraps FX rate band. PBOC injects most funds since Feb. amid yuan intervention. Turkish lira weakens past 3 per dollar for first time, rand weakens past 13 per dollar for first time since Dec. 2001. Oil extends decline from lowest close in more than 6 years. Fed minutes yesterday showed officials still concerned by low inflation, probability of a rate hike next month has fallen, futures show. U.K. retail sales in line with estimates. The Italian and Dutch markets are the worst-performing larger bourses, the U.K. the best. The euro is stronger against the dollar. German 10yr bond yields fall; French yields decline. Commodities decline, with Brent crude, WTI crude underperforming and zinc outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, Bloomberg economic expectations, Philadelphia Fed index, existing home sales, leading index due later.
Market Wrap
S&P 500 futures down 0.7% to 2059.2
Stoxx 600 down 1.2% to 376.9
US 10Yr yield down 3bps to 2.1%
German 10Yr yield down 4bps to 0.58%
MSCI Asia Pacific down 1.6% to 133.9
Gold spot up 0.5% to $1139.7/oz
Eurostoxx 50 -1%, FTSE 100 -0.4%, CAC 40 -0.9%, DAX -0.9%, IBEX -0.8%, FTSEMIB -1.4%, SMI -0.7%
Asian stocks fall with the Nikkei outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific down 1.6% to 133.9
Nikkei 225 down 0.9%, Hang Seng down 1.8%, Kospi down 1.3%, Shanghai Composite down 3.4%, ASX down 1.7%, Sensex down 1.2%
1 out of 10 sectors rise with telcos, health care outperforming and energy, materials underperforming
Euro up 0.4% to $1.1165
Dollar Index down 0.08% to 96.28
Italian 10Yr yield down 4bps to 1.77%
Spanish 10Yr yield down 5bps to 1.94%
French 10Yr yield down 4bps to 0.93%
S&P GSCI Index down 0.7% to 352.4
Brent Futures down 1.5% to $46.4/bbl, WTI Futures down 1.2% to $40.3/bbl
LME 3m Copper up 1.6% to $5072.5/MT
LME 3m Nickel up 0.2% to $10445/MT
Wheat futures up 0.3% to 501.5 USd/bu
Bulletin Headline Summary from RanSquawk and Bloomberg
Dovish interpretation of the FOMC minutes failed to lift investor sentiment, which instead remained depressed as market participants focused on the ever growing risks stemming from China to weigh on equities
Unfavourable rate flows and less than impressive UK retail saw GBP underperform its major counterparts
Going forward, highlights include US weekly jobs report, Philadelphia Fed, existing home sales and EIA natural gas storage change data as well as earnings from Salesforce.com, Gap and HP
Treasuries gain amid global equity rout, further losses in oi;
Kazakhstan became the latest country to abandon control of its currency, tenge plunges 23% after country shifted to a free float.
PBOC injected the most funds in open-market operations since February as intervention to prop up the yuan strained the supply of cash and drove a key money-market rate to a four- month high
The Shanghai Composite dropped 3.4% to 3,664.29, lowest level since Aug. 6; about 17% of mainland-listed shares remain halted
North Korea fired a rocket at a South Korean border position, prompting Seoul’s forces to unleash an artillery barrage across the demilitarized zone dividing the two countries
When it comes to using a private server for her e-mails when she was secretary of state, Hillary Clinton “didn’t really think it through,” according to her communications director
Sovereign 10Y bond yields lower. Asian and European stocks fall, U.S. equity-index futures drop.Crude oil lower, gold and copper rise
DB’s Jim Reid completes the overnight recap
Markets are also slightly lost, upset and confused at the moment with a slightly lower US CPI and a dovish set of Fed minutes setting up a sharp re-pricing of the front end of the US curve last night with 2yr notes falling 6.1bps to 0.659% and the probability of a September hike falling to 38% from 48% 24 hours earlier and 54% at its recent peak on August 7th. 10yr yields also saw a decent move lower yesterday, falling 6.7bps to 2.126% and back to down to the lowest closing yield since May 29th. The minutes briefly helped reverse a 1% loss in US equities after another weak European session (Stoxx 600 -1.76%) but it ended back down nearer to its session lows at the close (-0.83%).
EM woes and continued falls in Oil continue to hit sentiment. Interestingly the Fed’s minutes refer to the July 28-29