America can't catch a breath. Congress recently passed a short-term funding bill just hours before a government shutdown, buying more time to negotiate a deal on the federal budget by mid-November. The massive national debt continues to grow to $33 trillion, but bipartisan cooperation is needed to make difficult decisions on taxes and spending. Entitlement programmes like Social Security face shortfalls in the coming years while interest repayment surpasses military spending. Some experts advocate forming a bipartisan commission to address the debt and make recommendations, as Congress must ultimately compromise because inaction risks severe economic impacts.
EQUITY
U.S. stock futures remained stable despite a last-minute government shutdown deal. President Biden pledged support for Ukraine despite $6 billion in aid being omitted from the renewed spending bill. Around 4,000 UAW workers reached a labour deal with Mack Trucks, averting a strike while seeking better compensation and benefits. The World Bank lowered China's 2024 growth forecast to 4.4% from 4.8% due to real estate challenges, a sluggish recovery, and external pressures, although Chinese factory activity grew.
GOLD
Gold prices are spiralling, reaching 7-month lows below $1,800 per ounce as the almighty dollar weighs on the precious metal. With the Fed determined to keep interest rates high to combat inflation, gold is expected to remain under pressure, possibly dropping further to reach a "death cross" technical pattern. However, some analysts say gold is oversold and could rebound sharply if there is a market event that forces the Fed to pivot on policy.
OIL
Oil prices slipped in early Asian trade as a stronger US dollar and rising US bond yields weighed on prices. Declining demand in China and Europe, along with increased supply from Iraq, Libya, and elsewhere, are offsetting the impact of Saudi Arabia and Russia's production cuts. Analysts predict OPEC+ members may start to ease voluntary additional cuts soon to meet contractual delivery obligations and protect market share.
CURRENCY
The dollar index climbed for four straight weeks and hit 106.89 as strong US economic data supports the view that the Federal Reserve will maintain high interest rates longer. The yen weakened, nearing 150, which is seen as a line in the sand for possible currency intervention by the Bank of Japan, though the decision to intervene depends on public anger over a weak yen. While the euro has struggled with economic weakness, dollar strength may fade next year as higher rates slow US growth and Europe finds a trough, helping the euro recover.
