The gold price has been rising steadily and on Monday (27 July) hit an all-time high of $1,944/oz, beating its previous record high of $1,922 from 2011. Even as it reaches new highs, analysts at Schroeders don’t think it’s time to grow concerned about the price of gold, or gold equities. Here’s why.
The economic growth of both economies has fallen sharply in the Q2 of the year due to the coronavirus restriction measures. Germany’s GDP saw a decrease of 11.7% on yoy rate. The country was plunged into the deepest recession in post-war history. On the other side of the Atlantic, the US GDP was down 32.9% in annualised terms, the biggest fall since the current historical series began in 1947. Spain and France accompany them with record contractions of 22,1% and 19%, respectively.
Monex Europe | The FOMC kept rates unchanged, extended its swap facility, and added language to its statement emphasizing that the path of the US economy depended heavily on the path of the virus. In our view, outcome-based forward guidance is likely as early as September, when the FOMC will have a new batch of projections, as well as hard data indicating the costs of the second wave of COVID-19 infections.
Geraint Harvey, Daniel Wintersberger, Peter Turnbull via The ConversationUK | Several airlines have announced sizeable redundancy programmes due to Covid-19 spreading, but previous crises show that there are viable alternatives to job cuts. After the 2008 financial crisis airlines like Southwest adopted different measures including work-sharing, temporary pay cuts and furlough. As a result, they were less likely to experience industrial strife and the business recovered more quickly.
Pablo Pardo (Washington) | In March, Maryland-based pharmaceutical company Novavax was trading at 36 dollar cents (32 euro cents). It was a “penny stock”. On July 8th, Novavax closed at $104.56 (92.76 euros). Later they will say that the coronavirus is bad for the economy. What will happen to the price of the pharmaceutical companies on the day when a vaccine against the coronavirus arrives? And what will happen to the excess income arising from the help to the unemployed? And what about the much-trumpeted transformation of supply chains?
Interest across the globe on using negative rates as a policy tool has increased with global interest rates moving towards zero in the hopes of pulling economies quickly out of the COVID-19 recession. In a report by Citi GPS, analysts Matt King and Catherine L. Mann look at the positives of negative rates in terms of whether they boost credit growth, stimulate spending, or contribute to currency weakness. More importantly, they explore the side effects negative rates would have on corporates, households, banks, pensions, and markets.
Central banks have once again received criticism for the support they have provided to markets-to-date and their role as inflation targeters. Analysts at AXA IM’s view is that much of this criticism is misplaced: They expect central banks to remain inflation targeters, even though seeing the immediate pandemic impact as likely disinflationary through 2022.
AstraZeneca and the University of Oxford have published in The Lancet preliminary results of the Phase I/II trial of their Covid-19 vaccine candidate. In line with last week’s information, it generated an immune response via neutralizing antibodies and T-cells (cellular immunity). As was the case last week when we heard from Moderna and Johnson & Johnson, these are positive developments, bringing us closer to being able to achieve a vaccine against Covid-19
Horace Yeung and Flora Huang via The ConversationUK | Following the introduction of a new Chinese national security law, some are questioning the sustainability of Hong Kong’s position as an international financial centre. These doubts are augmented by China’s plans to transform Hainan, another island off the southern coast of the Chinese mainland, into a free-trade hub. This further calls into question the idea that Hong Kong is irreplaceable for some.
We enter the second half of the year with the cases of Covid-19 increasing uncontrollably on the American continent and in a very worrying way in the United States. The growing political uncertainty, accentuated by the trade conflict between US and China, puts the dollar in an unusual situation.Without falling into excessive pessimism, UBS AM Chief Strategist Evan Brown analyses in detail the current state of the currency and reveals his tactical positions given the current scenario.