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The U.S. economic surprise index has surged, driven by strong retail sales and improved jobless claims, leading to a sharp rise in the 10-year yield and the Dollar Index. However, despite a favorable economic outlook and rising Trump poll numbers fueling market optimism, the SP500's high valuation raises concerns about potential risks from prolonged high rates and fiscal deficits.
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Gold prices have surged to a record high, reaching $2,706 per troy ounce, with analysts at UBS predicting a rise to $2,900 by September 2025. This increase is driven by falling interest rates, strong central bank purchases, and ongoing demand for safe investments amid global uncertainties. Political factors and monetary easing from central banks, including the European Central Bank's recent rate cuts, are expected to further support gold prices in the coming weeks.
UBS economist Paul Donovan highlights a disconnect between sentiment surveys and actual economic performance, particularly in manufacturing. Despite frequent negative signals from surveys, real manufacturing output has remained stable, suggesting that pessimistic biases in sentiment do not reflect economic reality. This issue is more pronounced in Europe due to limited data releases and delays in reporting.
Financial journalism often conflates sentiment with economic reality, leading to contradictory headlines about manufacturing output. Despite pessimistic sentiment surveys, actual manufacturing performance has remained stable, particularly in the US and Germany, where media emphasis on negative sentiment can distort perceptions of the economy. Investors should be cautious, as these surveys tend to reflect a pessimistic bias that does not align with the true economic situation.
The upcoming U.S. elections could significantly impact commodity markets, with a potential Kamala Harris victory likely boosting demand for industrial metals and renewable energy materials due to increased infrastructure spending. Conversely, a Trump re-election may favor fossil fuels through deregulation and support for domestic production, affecting agricultural exports and trade relations. Both scenarios will influence the U.S. dollar, indirectly impacting commodity prices.
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The upcoming U.S. election could significantly impact commodity markets, with Kamala Harris's potential victory likely boosting demand for industrial metals and renewable energy materials due to increased infrastructure spending. Conversely, a Trump re-election may favor fossil fuels and deregulation, affecting supply and prices. Both scenarios could influence the U.S. dollar's strength, further impacting commodity prices.
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The outcome of the US elections could significantly impact commodity markets, with a Kamala Harris win likely boosting demand for renewable energy commodities like copper and lithium, while reducing reliance on fossil fuels. In contrast, a Trump re-election may favor traditional fossil fuels through deregulation and increase demand for industrial metals due to infrastructure spending. Both scenarios could influence precious metals as geopolitical uncertainty drives demand for safe-haven assets like gold, alongside fiscal and monetary policies affecting the US dollar and commodity prices.
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US indices are set for historic gains, with the S&P 500 and Dow Jones on track for their best run since late 2023. The ASX 200 reached a record high, driven by strong bank performance, while key economic indicators showed positive trends in retail sales and job growth.Looking ahead, significant events include the Reserve Bank of Australia's speech and the release of various PMIs in the US, Europe, and Japan, alongside the third-quarter earnings season featuring major companies like Tesla and Boeing.
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Institutional investors are increasingly worried about the U.S. national debt, which is projected to exceed $1.9 trillion, raising concerns about its impact on portfolios amid high interest rates and geopolitical tensions. A recent survey revealed that central bank policies and macroeconomic risks are top concerns, with many institutions reassessing their fixed income strategies. The rising debt levels are not just a U.S. issue but a global phenomenon, prompting scrutiny of fiscal policies worldwide.
The outcome of the US elections could significantly impact financial markets, with Trump favoring traditional sectors like oil and defense, while Harris would boost renewable energy and healthcare. Trump's policies may lead to volatility and inflation, whereas Harris could stabilize markets with a more moderate approach. Investors must adapt their strategies based on the election result, as each candidate presents distinct opportunities and risks.
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