Market 12/07: BoJ signals possibility of ending negative interest rate period

Jobless claims surge as seasonal hiring hits record low

Initial jobless claims (seasonally adjusted) unchanged at 220,000 (but up if unadjusted).

Of which, initial jobless claims in California dropped sharply.

However, continuing claims (seasonally adjusted) fell below 1.9 million.

The rise in initial jobless claims last week came earlier than every year, and also increased by a larger margin than the same period in previous years.

The surge in continuing claims also shows a similar pattern.

Challenger's November layoff announcements fell -40.8% y/y.

This is the first decline since July, mainly due to high layoff announcements in the same period last year.
Retail sector had the most layoff announcements in November, logistics sector had the fewest.

Private sector average hours up +0.9% y/y.

Hourly earnings +4.0% y/y — in line with the average over the past few decades, much lower than the growth in the 1970s.

Yen and Japanese bond yields surge after Ueda's remarks

BoJ Governor Ueda said at the BoJ meeting that monetary policy management “will become even more challenging from the end of the year and into next year”.

Ueda sparked speculation that BoJ will tighten monetary policy which is still in Japan’s “super loose” state.

Japan's 10Y government bond yield surged an additional +11bps immediately after.

USD/JPY immediately plunged (JPY appreciates) as markets increasingly expect Bank of Japan to end negative interest rates.

Oil prices hit 5-month low despite OPEC+ production cut plan

US WTI crude fell below 70 USD/barrel, with yesterday's close the lowest since June.

Brent crude also continued to decline, now below 75 USD/barrel.

Brent crude oil line chart ($/bbl) shows oil prices sliding as OPEC+ cuts fail to offset increased output from rivals

Private crude inventories fell last week, with about 7% of them just transferred to SPR.

In today's meeting between Putin and Saudi Crown Prince, Russia and Saudi Arabia called on all OPEC+ members to join in cutting oil production.

Central banks are stockpiling more and more gold

Central banks are on track to buy >1,000 tons of gold for the second consecutive year. This could be the highest purchase since 2010.

Viet Hustler previously noted Gold will continue to be a reserve asset alongside USD due to current US (and EU) public debt difficulties (see old article here).

Dutch central bank (DNB) said in an interview that DNB holds gold worth about 4% of GDP, on par with France, Italy, and Germany.

Poland's central bank (NBP) recently bought about 300 tons of gold.
- Before 2017, Poland held 103 tons of gold, only 1% of GDP.
- To “stand shoulder to shoulder” with other EU countries, in 2018 NBP began aggressively buying gold and now holds 334 tons of gold ~ 3% of Poland's GDP.

Estimated that China's central bank currently holds 5,220 tons of gold, worth nearly 2% of GDP.

Singapore is also another case of buying a lot of gold since 2021.
- In 2018, Singapore's gold to GDP ratio was 1% and has now increased to 3%.

The AI fever returns stronger with Google's Gemini and AMD's new chip

Wall Street reacts positively to Gemini - Google's new AI model. $GOOG stock surges.

Meanwhile, AMD has just launched the MI300X chip — the AI fever continues to heat up:

AMD claims this is the “most advanced AI accelerator in the industry”, superior to Nvidia's current products.

FYI: Contribution of the 3 largest chip companies in the AI Chip sector to the overall index:

Other news

The options market is betting Bitcoin will reach 50,000 USD in January. This is also the month Bitcoin ETF is expected to be approved.

McDonald’s will open its first CosMc’s restaurant (smaller store format) this week

Robinhood launches crypto trading app in Europe.

Bloomberg Commodity Index falls to 2-year low as investors grow increasingly worried about declining global commodity demand.

The White House says the US believes it is very likely that US troops will engage in confrontation with Russian troops after Russia's victory in Ukraine.