Good morning. Here’s what you need to know.
- Asian markets were higher in overnight trading, with the Japanese Nikkei 225 advancing 1.5%, the Hong Kong Hang Seng rising 1.8%, and the Shanghai Composite up 0.8%. European markets are mixed in morning trading, with Spain and Italy currently down 0.5% and 0.7%, respectively. In the United States, futures point to a flat open.
- Silver futures are down 3.6% today, currently trading around $21.54 an ounce. The precious metal is now down 38.5% from September 2012, when a vicious sell-off in the precious metals complex really got going.
- Barron’s columnist Randall Forsyth argued in a piece out over the weekend that the big sell-off in gold has been driven in part by “suspicious selling” patterns and heavy liquidations from exchange-traded funds. “[Gold bugs] point to bursts of selling on Friday, April 12, which resulted in prices plunging by more than 5%, and to dumping that resumed the following Monday in Asia, early in the day when markets are illiquid,” wrote Forsyth, “But a seller who wanted to unload a large position at the optimal price would have done precisely the opposite—liquidate as discreetly as possible.”
- North Korea fired three short-range missiles into the Sea of Japan on Saturday in a mild provocation following joint U.S.-South Korean naval exercises last week. North Korea’s neighbours have been on high alert for a possible launch of medium-range ballistic missiles, so these actions from North Korea may come as a small relief to South Korean authorities.
- The pace of appreciation of new home prices in China slowed in April. Prices rose in 67 of 70 major cities, down from 68 in March. The highest price advance at the individual city level was 2.1%, down from 3.2% the month before.
- The weekly CFTC Commitment of Traders report released Friday afternoon revealed that hedge fund managers shifted to a net short position in Treasuries during the week ended May 14 for the first time in two months. The shift comes amid increased discussion of tapering of Federal Reserve stimulus in recent weeks, which would likely translate to reduced demand for Treasury bonds.
- The Obama administration approved Friday the export of natural gas by the Freeport LNG project in Texas to countries that do not have a trade agreement with the United States. This is only the second such approval ever made – the first in two years – and highlights how the U.S. energy revolution is beginning to have a real impact.
- In a commencement speech delivered Saturday to the Simon Rock graduating class of 2013, Federal Reserve Chairman Ben Bernanke gave an optimistic outlook for the economy in the long-run. “Importantly, as trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly,” said Bernanke. “In short, both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.”
- Chicago Fed President Charles Evans will deliver a speech on monetary policy and the economy at the CFA Society Chicago at 1 PM ET. Evans will take questions from the audience following the speech and will also meet separately with reporters.
- There are no major economic data points out in the U.S. on Monday. The next big release is on Wednesday, when the Federal Reserve releases the minutes from its April 30 – May 1 policy meeting. Given all of the talk about tapering of monetary stimulus in recent weeks, markets will be listening closely for any sort of shift on the Committee over the appropriate time to begin tapering.
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