ISRAEL: Ceasefire Prospects Diminish As IDF Set To Advance Into Gaza City
Aug-21 13:33
The prospect of the ceasefire agreement approved by Hamas at the start of the week coming into force appears to be diminishing rapidly as Israeli forces launch the first phases of a ground assault on Gaza City, the largest conurbation in the Gaza Strip not controlled by the IDF.
- Hamas accepted a ceasefire proposal presented by mediators Egypt and Qatar, with the proposal seen as 'almost identical' to that put forward by White House Middle East envoy Steve Witkoff. The proposal envisages a 60-day ceasefire in exchange for half the remaining living hostages held by Hamas being released. During this period, negotiations would take place on a permanent peace agreement. The Israeli gov't has given little indication that it is seriously considering the proposal.
- On 20 Aug, reports emerged suggesting that tens of thousands of military reservists face being called up to take part in operations that would effectively result in a full Israeli military takeover of the Gaza Strip (see 'ISRAEL: 60k To Be Called Up For Gaza City Op That Could Start Within Weeks', 20 Aug).
- Israeli officials and organisations have been issuing "initial warnings" for Palestinians and aid organisations to vacate Gaza City ahead of the planned ground assault. Unconfirmed reports suggest PM Benjamin Netanyahu is visiting the IDF's southern command to finalise the plans.
- Despite the apparent inevitability of a ground assault, there remains the prospect that Netanyahu is pursuing a maximalist position, threatening a months-long operation in Gaza in order to secure further concessions on the ceasefire proposal.
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GOLD: Extending Higher Again Without An Obvious Trigger
Jul-22 13:30
Spot gold is building on yesterday’s solid 1.4% rally, extending higher over the last 90 minutes to its highest since June 16. This widens the gap with prior resistance at $3,395.1 (Jun 23 high, which was pierced yesterday), signalling scope for a push towards $3,451.3 (Jun 16 high). Note that moving average studies are in a bull-mode position highlighting a dominant uptrend.
- Today’s 0.4% uptick doesn’t appear to have a clear trigger. US Treasury Secretary Bessent signalled that trade negotiations with China will continue next Monday and Tuesday, with talks moving to a “new level”. Meanwhile, he continued to suggest an ousting of Powell as Fed Chair is unlikely in the short-term. Neither of these comments seem overtly positive for Gold.
- Positioning data as of last Tuesday indicated another 10k increase in net Gold future longs to 213k, the most since the start of April. After stretched long positioning moderated during April, longs have gradually started building back up over the last two months, likely helping underpin price action.
- Looking ahead, focus remains on tariff/Fed-related headline flow from the Trump administration, alongside next week’s heavy macro calendar (including but not limited to the Fed decision, US quarterly refunding, US nonfarm payrolls and the BOJ).
US DATA: Redbook Retail Sales Maintain Steady Growth In Early Q3
Jul-22 13:15
The Johnson Redbook Retail Sales Index continues to post solid gains, rising 5.1% Y/Y in the week ending Jul 19, fairly steady compared with 5.2% the prior week. The month-to-date rise is 5.2% Y/Y (albeit below retailers' targeted 5.7%).
- The report's anecdotal section notes upcoming sales tax holidays in various states, and mentions the impact of tariffs for the first time in several weeks: "As heat waves swept across the country, retailers reported brisk demand for their remaining inventories of hot-weather merchandise. With some school systems starting early, Back-to-School Tax-Free Holidays in many states are approaching quickly this year. Families are increasingly turning to discount stores for value-oriented back-to-school savings in light of rising costs and tariffs."
- Census Bureau retail sales rose 3.9% Y/Y in June, with Control Group sales up 4.0% - mirroring above-typical Redbook sales in their Y/Y peak in Feb-April but slowing slightly since then.
- The Redbook report (which captures 80% of Census Bureau retail sales) suggests fairly steady retail sales growth in the early part of Q3.
US TSYS: Extending Highs
Jul-22 13:10
- Treasury futures have recovered from late overnight lows (initially following Bund rebound), making modest gains across the board at the moment: Sep'25 10Y +2.5 at 111-08.5, yield at 4.3599% (-.0178).
- No policy related comments from Chair Powell at regulatory conference (Fed in policy Blackout since last Friday); Philly Fed non-mfg activity much better than expected.
- Early week support has resulted in a break of the 20-day EMA, strengthening the recovery, and this has exposed resistance at 111-13+, the Jul 10 high. A clear break of this hurdle would highlight a stronger reversal.
