Gold Glitters, Oil Splashes
If gold is competing with bonds for investment then the equation is moving into bullion's favour. Treasuries now pay nearly nothing with 5-year notes falling another 2.8 bps to just 0.19% on Tuesday. US 10s also hit 0.503%, a record closing low.
But it's not just yields that are boosting precious metals and other commodities. It's increasingly clear that House Democrats led by Nancy Pelosi are playing hardball on stimulus talks. She wants $600 extra payments to continue to until February as part of a $3.4 trillion package.Republicans have balked at the measures but Pelosi may have calculated that voters will blame Trump if there's no deal and payouts are cut. She risks overplaying her hand and some concessions will need to be granted but odds are increasing that spending will be closer to $3 trillion than $1 trillion. It's another huge hole in the deficit that makes the case for precious metals ever-stronger.
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