- Geopolitical tensions ratcheted up after Israeli strikes on Iran's embassy in Syria, raising the risk of a further escalation of conflict in the Middle East and lifting the safe-haven Gold price to a fresh record peak on Wednesday.
- Data released this week showed that the US manufacturing sector expanded in March for the first time since September 2022 and that demand for labor remains elevated, forcing investors to trim their bets for rate cuts in the US.
- The Labor Department published the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday, which showed that job openings rose modestly from 8.75 million and stayed at a historically high level of 8.76 million in February.
- Separately, the Commerce Department reported that orders for manufactured goods rebounded in February after two straight monthly declines and rose more than expected by 1.4% amid demand for machinery and commercial aircraft.
- San Francisco Fed President Mary Daly noted on Tuesday that inflation is gradually decreasing, though she feels no urgency to lower interest rates, and that three rate cuts this year is a projection, not a promise.
- Cleveland President Loretta Mester said that substantial progress has been made on inflation, though she wants to see more evidence that inflation is headed towards the 2% target before cutting interest rates.
- This comes on the back of Fed Chair Jerome Powell's remarks on Friday, saying that there was no need to be in a hurry to cut interest rates and raised doubts if the central bank will cut rates three times this year.
- The current market pricing indicates a nearly even chance that the Federal Reserve will start cutting rates in June and a total of 65 basis points (bps) rate cut for 2024, lower than the central bank's projection of 75 bps.
- The yield on the benchmark 10-year US government bond advanced to a four-month high, which should help limit the downside for the US Dollar and cap gains for the non-yielding yellow metal amid overbought conditions.
- Investors now look to the US economic docket, featuring the ADP report on private-sector employment and ISM Services PMI, which, along with speeches by influential FOMC members, should provide a fresh impetus
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