Gold Prices Break Out on US - Iran Sanctions
The US and Iran are trading accusation in the wake of the attacks on 2-tankers in the Gulf of Oman on Thursday. Gold prices have surged to a fresh 14-month high and are poised to test the 1,365 regions. The dollar is mostly stronger despite slipping US yields in the wake of the softer than expected US import prices. Inflation data in the US this week shows that prices are on the decline. White House advisor Larry Kudlow warned of consequences if Chinese President Xi does not meet with Trump at G20 this month. Trump is still waiting for a response from Xi. Corn and soybean prices are also breaking out and will likely help buoy US inflation.
US Import Prices Continue to Decline
US import prices have declined for 5-consecutive momentum according to the US Labor Department. The BLS reported that import prices dropped 0.3% last month, the biggest decline since last December. Data for April was revised down to show import prices rising 0.1% instead of climbing 0.2% as previously reported. Expectations were for import prices to decline by 0.2% in May. For the 12-months ending in May import prices fell 1.5% after decreasing 0.3% in April.
US initial claims for unemployment rose 3,000 to 222,000 for the week ended June 8. Expectations were for claims to decline to 216,000 in the latest week. While layoffs remain relatively low, the third straight weekly increase in claims suggests some softening in labor market conditions. The four-week moving average of initial claims, considered a better measure of labor market trends as it smooths weekly volatility, increased 2,500 to 217,750 last week.
Business Round Table Shows CEOs are Concern
The CEO Business Economic Roundtable Outlook Index shows that heads of companies are concerned as the index fell by 5.7 points in the Q2 to 89.5. It also marked the fifth straight quarter of declining optimism. Capital expenditure plans, CEO plans for hiring and expectations for sales also fell from the previous quarter.
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