The precious metals market is being boosted by expectations that the US government will reopen soon - a signal that a resumption of economic data flows could give the Federal Reserve (FED) more grounds to cut interest rates in December.
The US Senate voted 60-40 on Sunday to pass a procedure to push for a bill to end a government shutdown, with a group of dovish Democratic Senators separating from the party leadership to support the deal.
However, the bill's House of Representatives approval is still uncertain due to opposition from Democratic leaders. The deal has not met the goals of Democratic leaders who want to extend the nearly expired Obamacare subsidy.
However, Democrats have won a commitment from Republicans to vote on the Affordable Care Act (ACA) tax credit extension bill before mid-December.
The US Senate has been on a break until today and has not yet set a final approval deadline. It is not yet clear how quickly the government will reopen. The Senate needs the consent of all members to quickly end this process, and just one nghiist who opposes it could delay the process for days. House Speaker Mike Johnson is expected to notify lawmakers 36 hours before calling them back to Washington," Bloomberg reported.
It seems we are getting closer to ending the closure, President Donald Trump told reporters on Sunday evening, according to Bloomberg.
Information from the US Senate on the approach to passing the government opening bill has helped the global stock market increase strongly, with US stock indexes expected to open significantly higher in today's New York session.
US Treasury yields rose slightly, while the USD index also increased. Food prices for futures increased slightly due to expectations that reports from the US Department of Agriculture (USDA) will be re-issued soon. Crude oil prices have barely responded significantly to the news.
However, the US government's closure has delayed key economic reports such as the consumer price index (CPI) and the October jobs report, prolonging the debate on the possibility of the Fed cutting interest rates at its December meeting.
The lack of official reports makes it difficult for policymakers to accurately assess inflation trends and the labor market, while data sources replacing government inflation rates are more limited, Bloomberg said.
The report also said that the impact of the closure on data collection and release activities will be a reason for the Fed to postpone interest rate cuts in December, although the market is still leaning towards the possibility of a rate cut, and investors will closely monitor the statements of FED officials this week for clues for the next step.
Even if the government reopens, the US Bureau of Labor Statistics (BLS) will find it difficult to collect and process data for both the October and November CPI reports ahead of the December FOMC meeting. We believe that if the October data were released, it could pave the way for a rate cut at the year-end meeting," Bloomberg Economics added.
At the same time, the US and China agreed to suspend port fees for each other's vessels for one year and suspend investigations related to the maritime sector, according to Bloomberg. The Trump administration has suspended an investigation into China's shipbuilding industry, while Beijing has also postponed the imposition of special port tariffs on US ships.
The US trade representative said Washington will continue negotiations with Beijing on issues raised in the investigation. The temporary easing of maritime tensions is in line with the cooling trend in relations between Washington and Beijing following the recent summit between the two countries leaders, Bloomberg said. Although shipping is not the most prominent sector, it is still the foundation of global trade."
In outside markets, the USD index decreased slightly, crude oil prices increased around $60/barrel, while the yield on the 10-year US Treasury note is currently at 4.1%.
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