Business

With the latest ECB statement due out in just two days, traders are curious to see how Mario Draghi will escape from the trap in which the European central bank has found itself: on one hand, seeking to temper the recent dramatic rise in the Euro, on the other running out of QE eligible private-sector debt to monetize, especially in its largest captive market, Germany. While we don't know how Draghi will succeed (or fail) in this endeavor, overnight Deutsche Bank has released a useful analysis breaking down what share of bond markets the biggest central banks currently own.

Despite President Trump, Treasury Secretary Steven Mnuchin and OMB Director Mick Mulvaney’s urgings, it appears that Congress will not combine funding for the Hurricane Harvey cleanup effort with a measure to raise the debt ceiling, according to House Majority Leader Kevin McCarthy. Congress’s decision will create a major headache for the Trump administration in the coming weeks, as it tries to push through a government-funding bill and a measure to raise the debt ceiling over objections of conservatives who are calling for budget cuts and other concessions.

Authored by Frank Shostak via The Mises Institute,

After the 2007-2009 global financial crisis, fears of ballooning public debt and worries about the drag on economic growth pushed authorities in some countries to lower government spending, a tactic that economists now think may have slowed recovery. Note that in the United States the total debt to GDP ratio stood at 349 in Q1 this year.

Below looks at the Gold/US Dollar ratio over the past 8-years. The ratio is testing a level that has been critical to Gold bulls for the past few years and we suspect it will be critical for it again at this level!

CLICK ON CHART TO ENLARGE

In a note on the role of gold as a "geopolitical hedge of last resort", Goldman chief commodities strategist, Jeff Currie, writes that while it is tempting to blame the rally in gold prices on recent events in North Korea - which have certainly helped create a bid in gold - they only explain a fraction, or ~$15/oz of the more than $100/oz rally since mid-July. Instead, Goldman finds that the events in Washington over the past two months play a far larger role in the recent gold rally coupled by a sharply weaker dollar.