Morning Call For Friday, Dec. 28

Mar 10-year T-notes (ZNH19 -0-035) this morning are down -4 ticks. Thursday's closes: TYH9 +16.00, FVH9 +10.00. Mar 10-year T-notes on Thursday closed higher on the the larger-than-expected decline in U.S Dec consumer confidence to a 5-month low and on the drop in the 10-year T-note breakeven inflation expectations rate to a 17-1/4 month low.

The dollar index (DXY00 -0.29%) this morning is down -0.265 (-0.27%) at a 1-week low. EUR/USD (^EURUSD +0.34%) is up +0.0033 (+0.29%). USD/JPY (^USDJPY -0.64%) is down -0.75 (-0.68%). Thursday's closes: Dollar Index -0.569 (-0.59%), EUR/USD +0.0077 (+0.68%), USD/JPY -0.36 (-0.32%). The dollar index on Thursday closed lower on the larger-than-expected decline in U.S Dec consumer confidence to a 5-month low and by lower T-note yields, which was negative for the dollar's interest rate differentials.

Metals prices this morning are mixed. Feb gold (GCG19 +0.01%) is -0.3 (-0.02%), Mar silver (SIH19 +0.49%) is +0.075 (+0.49%), and Mar copper (HGH19 +1.14%) is +0.030 (+1.11%). Thursday's closes: Feb Comex gold (GCG19) on Thursday closed up +8.1 (+0.64%) and March silver closed up +0.187 (+1.24%). Metals prices moved higher Thursday with Feb gold just below Wednesday's 6-1/4 month high and Mar silver climbing to a 4-1/2 month high as a sharp decline in U.S. equity markets fueled safe-haven demand for precious metals. A weaker dollar Thursday was another supportive factor for metals. In addition, U.S. political risks are boosting demand for gold as store of wealth as the partial shutdown of the U.S. government enters its sixth day with no prospect for a resolution. President Trump said he won't relent on the partial government shutdown unless Congress funds his border wall, which raises the prospect for an extended shutdown. The turmoil in global equity markets increased demand for gold as a store of wealth as long gold positions in ETFs rose to a 6-1/4 month high Wednesday. A negative for silver prices is ongoing fund selling as long silver positions in ETFs fell for a seventh consecutive session to a 10-1/2 month low on Wednesday.

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