GOLD: Gold Range Trading Post-US CPI Data, Fed Speakers Later

Asia Pac equity inflow momentum was mostly positive into the end of last week. South Korea and Taiwan remained the standouts, see the table below. 

• Taiwan has seen just over $1bn in net inflows over the past 5 trading sessions. South Korea trailed slightly, at just above $700mn. The early impetus for South Korean markets today is modest outflow pressures, as US equity futures track weaker in response to Trump's 30% tariff threat against the EU and Mexico (made over the weekend).
• Markets remain hopeful that lower tariff rates can be negotiated ahead of the Aug 1 deadline. Earnings, particularly in the tech space will be the other focus point.
• Elsewhere inflow momentum was positive into Indian markets, as YTD outflows continue to be scaled back.
• A positive end to the week for Thailand was also evident. 

Table 1: Asian Markets Net Equity Flows 

Source: Bloomberg Finance L.P./MNI 

The TYU5 range has been 110-24+ to 110-28 during the Asia-Pacific session. It last changed hands at 110-27, up 0-04 from the previous close. 

• The US 2-year yield has edged lower trading around 3.88%
• The US 10-year yield has edged higher trading around 4.413%.
• The 10-year yield is again testing the 4.40/45% pivot within its wider 4.10% - 4.65% range. The market is clearly worried about inflation and the CPI this week will be a critical input into the market's thinking. A sustained close back above the 4.45% area could see more longs pared back, above here and the focus will turn back to the 4.60% area.
• Nick Timiraos on X: “Penn’s Peter Conti-Brown: “We are in a high-stakes moment in the history of the Federal Reserve. It seems clear to me that the Trump administration, using various mechanisms, [has] now cooked up a post-hoc explanation for Powell’s removal.”
• "TRUMP: IF POWELL TO STEP DOWN WOULD BE A GOOD THING" - BBG
• MNI BRIEF: US Budget Surplus $27B In June; YTD Deficit $1.3T. The U.S. government posted a USD27 billion budget surplus for June, up USD98 billion from a year earlier, reflecting strong tax receipts and collections of import duties, the Treasury Department said Monday.

Fig 1: 10-Year US Yield Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

Gold is little changed in today’s Asia-Pac session, after closing ~1% higher at $3355.59 on Friday.

• This came despite US tsys finishing Friday’s session with a bear-steepener. Higher rates are typically negative for gold, which doesn’t pay interest. Cash US tsys are slightly mixed in today's Asia-Pac session, with yields 1bp lower to 1bp higher.
• (Bloomberg) – “Gold has a raft of supportive drivers, from central-bank buying and investor inflows into exchange-traded funds to concerns about the trade war and, separately, the US fiscal outlook.”
• “Central banks and other institutions accumulated about 77 tons of gold on average each month from January through to May, according to Goldman Sachs Group Inc., which maintained forecasts for bullion to rally to fresh records in the coming quarters.”
• Mounting pressure on Federal Reserve Chair Jerome Powell continues, with President Donald Trump criticising his monetary policy approach as overly restrictive.