Will the US revalue it gold, and will the US have a strong dollar policy?
Gold & The Dollar
February 20 (King World News) – Peter Boockvar: … two big speculations that I’ve been hearing about over the past month, that being revaluing the price of gold that is marked currently at the US Treasury at $42 per ounce and also terming out US debt via more longer term debt issuance and maybe the speculation of having our foreign friends take some 100 year bonds, Treasury Secretary Scott Bessent had something to say to Bloomberg TV on both. On the latter with terming out our debt, “That’s a long way off.” On revaluing gold, “not what I had in mind” and he has no plans of visiting Fort Knox. He also mentioned wanting a strong dollar policy. No market response to Treasuries and gold but interesting to hear from him in light of all the speculation.
Yen Strengthening
The yen is back to testing the 150 level vs the US dollar for the first time since early December and something we should all watch, especially as we approach the end of the Japanese fiscal year as of the end of March. More attractive yields in Japan at more than decade highs, with JGB’s seemingly selling off every day (has rallied once since the end of January) and Japan still the largest holder of US Treasuries, more Japanese money might be in the process of being repatriated back home.
Post holidays and the rush to get goods, along with the continued Israel/Hamas truce which has kept the Houthi’s quiet resulted in container shipping costs to fall for a 9th straight week by $269 w/o/w to $2,618 for the Shanghai to Rotterdam route. That price is the lowest since early January 2024. The Shanghai to LA cost fell to the lowest since December 2024 at $3,888, down by $504.
Speaking of the pull forward of orders at the end of last year, Taiwan exports in January fell 3% y/o/y vs the estimate of a gain of 2.7%. The Economic Ministry of Affairs though is still optimistic for this year saying “Demand will remain solid for our supply chain of advanced technologies in semiconductors and servers, supporting export orders growth momentum.”
Reflecting a still tough macro backdrop for global manufacturing, the UK CBI February industrial orders figure was -28, though up 6 pts m/o/m and 2 pts above expectations. CBI said “The survey paints a downbeat picture of the manufacturing sector over the last three months, which can be attributed in part to low domestic business confidence following the Autumn Budget combined with a subdued international environment. Manufacturers expect to raise output in the quarter ahead. But with firms having rapidly run down stocks of finished goods, it’s possible that the need to re-build inventories partly explains this rebound. Order books remain weak from a long-term perspective.”
I’ll add, as seen in many places in Europe, and in the US, it’s been the services sector that has carried the economic day. The number is not typically market moving but the pound is just shy of a 2 month high, gilt yields are higher again while the FTSE 100 is down by .3%, though still up almost 7% year-to-date. There are still a lot of cheap stocks domiciled in the UK that we own.
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