Today’s economic data have moved the needle back a bit toward ‘no change’ to the Fed’s dovish stance. The March Durable Goods figure was .8% vs 2% expected and even that was driven by Military spending, which is tax revenue spending, not economically productive spending. Without the jump in Military, it would have been negative. This is in line with yesterday’s post about very weak machine tool sales for February.
The upshot is that positioning for continued dovishness continues to look like the right way to go on the bigger picture regardless of whether or not the Fed tries to manage that perception tomorrow. All year long, the creeping economic weakness has been gold’s best fundamental and while the economy has not rolled over, it just does not seem to be getting any better.
Several markets, including the precious metals, seem to be anticipating a still-dovish Fed and today’s data do nothing to hurt that view. The Fed has some cover to sit on its hands tomorrow if it so chooses. The linked article also includes a view of deteriorating consumer confidence, another helper should the Fed choose to do nothing, say nothing.
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