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That comes despite widespread optimism over US-China trade negotiations, which signal the potential for a breakthrough ahead of Trump's meeting with Xi later in the week. In Europe, this morning has seen a German Ifo business climate survey that brought an improved headline figure of 88.4, while the expectations metric rose to the highest level since Feb 2022. However, despite optimism over future business conditions, the worsening of current conditions (85.3) highlights a perception of a struggling economy that many hope will get better.
Not unlike the inverse yield curve for bonds, which is when short term rates exceed long term ones, backwardation is when spot prices for commodities pull ahead of the futures market. Normally, the precious metals market charts similarly to that of interest rates, with near term prices cheaper than longer term ones, which carry elevated risks of unforeseen change, as well as increased carrying costs.
With government data releases halted by the shutdown, markets turned to private indicators for clues about the economy's health. Payroll provider ADP reported a surprising 32,000 job losses in September-far below expectations for job gains-fuelling expectations for Fed rate cuts. However, several Fed officials maintained a cautious tone. Chicago Fed President Austan Goolsbee warned of persistent services inflation, while Dallas Fed's Lorie Logan suggested a slower path to policy normalization.