Thursday 21:30 released the U.S. initial jobless claims for the week to February 20, recorded 730,000, less than the expected 838,000. Continuing jobless claims for the week ending Feb. 13 were recorded at 4.419 million, the sixth consecutive week of decline.
Also released was the revised fourth-quarter annualized quarterly rate of U.S. real GDP, which registered 4.1%. U.S. durable goods orders also recorded the largest increase in six months in January. Spot Gold fell below $1,780 per ounce on the news, retreating $25 from its daily high and extending its decline to 1.41%. Spot silver then also fell 1%.
An hour later gold and silver rebounded briefly before extending their losses again. Near 12:00 pm late in the evening, spot gold touched $1,770/oz, extending its intraday decline to 1.9%.
Commenting on the US initial claims data for the week, CNBC said that jobless claims fell sharply last week despite the severe winter storms that hit Texas and other parts of the South.
The four-week average of initial claims for the week of Feb. 20 fell to 807,750, compared with 833,250 the week before. That said, jobless claims have bottomed out and we are seeing relatively better numbers each week.
Another agency commented that the sharp decrease in U.S. initial jobless claims last week implies that the pace of job cuts in the U.S. is starting to slow as the contagion rate of the new crown Epidemic declines and inoculation activity accelerates; in addition to the decrease in initial jobless claims last week, the previous value was revised downward and the number of renewals also decreased by 101,000; the initial claims data is still better than the darkest moment of the financial crisis in 2008. This means that job losses due to the epidemic are starting to slow down and the employment situation is expected to improve significantly as more Americans get vaccinated.
For U.S. real GDP in the fourth quarter, the Bureau of Economic Analysis said GDP growth reflected increases in exports, nonresidential fixed investment, consumer prices, residential fixed investment, and private inventory investment, which were partially offset by declines in state and local government spending and federal spending.
This reflects both the continued recovery of the economy from the earlier sharp downturn and the ongoing impact of the new coronavirus pandemic and some of the restrictions imposed in the United States.
The financial blog Zero Hedge, for its part, noted that for those following Inflation indicators, the GDP price index rose 2.1% in the fourth quarter after rising 3.5% in the third quarter; a figure that was higher than the widely expected 2%. However, there were no surprises in core personal consumption expenditures, which remained unchanged at 1.4% in the fourth quarter, also in line with widespread expectations. Of course, none of this matters to the market, as the only concern for traders is how strong the rebound will be in the first quarter and how big an inflationary wave Biden‘s trillion-dollar stimulus package will trigger.
There are also institutions that believe that strong U.S. durable goods shipments in January are also a good sign for first quarter GDP, with a good overall report and significant upward revisions. The U.S. economy is indeed poised for a massive rebound from the epidemic, and the $1.9 trillion bailout bill suggests continued strength in the U.S. economy.
Earlier in the day, the U.S. 10-year Treasury yield rose to 1.46%, the highest level since February 2020. It fell back to near 1.44% after the data was released.
In fact, gold prices have fallen for a second straight month as bond yields soared while investors weighed Fed Chairman Jerome Powell’s comments on economic growth and vaccine-friendly higher inflation. Powell stressed during a second day of congressional testimony that the U.S. economic recovery has a long way to go and that signs of higher prices do not necessarily lead to sustained high inflation.
After the biggest annual gain in 10 years in 2020, gold prices are down more than 5% so far in 2021. Goldman Sachs Group also lowered its expectations for gold, citing investors’ shift to riskier assets as a reason for the price’s underperformance.
For their part, ANZ commodity strategists Daniel Hynes and Soni Kumari said in a Feb. 25 report that we expect gold prices to move sideways in the next quarter or so as the bond sell-off continues and investors trade through the risky asset class for reflation.
One of the reasons for the bond sell-off is the market’s optimistic expectations for economic recovery. And several major financial firms expect the $1.9 trillion bailout bill to bear fruit and help recovery from the epidemic blockade, raising their forecasts for U.S. economic growth based on this.
Biden’s package, combined with the nearly $900 billion stimulus bill passed last December, is expected to encourage U.S. consumers, who contribute nearly 70 percent of U.S. economic growth, to unlock savings and significant pent-up demand.
HSBC Holdings, Europe’s largest bank, raised its full-year U.S. GDP growth forecast for 2021 by 1.5 percentage points to 5 percent, citing an expected recovery in consumer spending, and raised its 2022 growth forecast to 3.0 percent from 2.5 percent.
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