Core Points - The U.S. government shutdown has entered its 17th day, potentially setting a new historical record for duration [1][5] - The ongoing political conflict between the Republican and Democratic parties continues to escalate, with accusations exchanged regarding the cause of the shutdown [1][3] Group 1: Economic Impact - The shutdown has led to the freezing or cancellation of funding for over 200 projects across the U.S., totaling nearly $28 billion, primarily affecting Democratic-led states and cities [9] - The U.S. Labor Department has postponed the release of key economic data, including the Consumer Price Index (CPI) and employment statistics, which could hinder decision-making by the Federal Reserve [11][13] - The U.S. Treasury Secretary has warned that the ongoing shutdown is costing the economy approximately $15 billion per day [13] Group 2: Political Dynamics - The Democratic Senate leader has criticized Republicans for refusing to negotiate, attributing the shutdown to their actions [1] - The Republican Senate leader has called for Democrats to stop their "tantrums" and vote to reopen the government [3] - The Department of Homeland Security has attempted to shift blame for the shutdown onto Democrats, although several airports have refused to broadcast this message due to political content regulations [7] Group 3: Global Implications - The shutdown and the resulting lack of reliable economic data are raising concerns among international officials about the ability to formulate effective policies, potentially leading to increased risks of policy errors [17] - The ongoing situation may weaken the U.S. dollar's position in the global market, as other countries rely on U.S. data to assess their own economic conditions [19]

Core Insights - International and domestic gold prices have reached historic highs, with London spot gold and COMEX futures hitting $4218.13 and $4235.8 per ounce respectively, while Shanghai gold reached 960.42 yuan per gram, marking a year-to-date increase of over 60% for London gold [1][3] Market Trends - The third quarter saw gold prices initially stabilize before climbing, with London spot gold increasing by 16.8% and Shanghai gold by 14.5% by the end of the quarter [3] - Investment demand for gold has surged, compensating for a decline in physical consumption, as evidenced by a 17% increase in global gold ETF holdings year-to-date, reaching 9720 million ounces [3][4] Economic Factors - The expectation of interest rate cuts by the Federal Reserve has been a significant driver for gold prices, with market sentiment shifting following weaker-than-expected U.S. employment reports [5][6] - Concerns over the independence of the Federal Reserve have also contributed to rising gold prices, with the market anticipating further rate cuts [6][7] Future Outlook - Long-term support for gold prices remains intact due to factors such as the restructuring of the international monetary system and ongoing concerns about U.S. government debt [7][8] - Short-term volatility is expected, with potential technical corrections as gold prices have risen sharply [2][8]

Core Viewpoint - The U.S. government shutdown has led to a suspension of official economic data releases, impacting not only the U.S. but also other countries that rely on this data for economic assessments [1][3][5]. Group 1: Impact on Global Economies - Countries like Japan are facing challenges in making policy decisions due to the lack of U.S. economic data, complicating their monetary policy strategies [3][5]. - The shutdown has created a "data blind spot," increasing the risk of policy missteps as countries navigate economic uncertainties [1][3]. - The International Monetary Fund (IMF) warns that ongoing political pressure on data collection agencies could erode public trust in official statistics, complicating policy formulation for central banks and governments [5][6]. Group 2: Concerns Over U.S. Governance and Data Reliability - The shutdown, along with other recent events such as pressure on the Federal Reserve and the dismissal of the Labor Statistics Bureau chief, highlights deeper issues regarding U.S. governance and data reliability [4][5]. - There is growing skepticism about the U.S. governance capabilities and the reliability of its data, which could affect global reserve management and monetary decisions [5][7]. - The absence of reliable official statistics makes it difficult for countries to compare economic data over time, increasing uncertainty in economic assessments [7]. Group 3: Alternative Data Sources - Despite the shutdown, the Federal Reserve continues to collect economic data independently, and private data service providers are offering alternative solutions [5][6]. - Central banks are adapting by piecing together non-official data to make short-term assessments, although this approach lacks the comparability of official statistics [5][7].

Core Viewpoint - The Federal Reserve faces increased downside risks to the U.S. economy, necessitating adjustments in monetary policy to return the federal funds rate to a neutral level [1][3] Group 1: Economic Outlook - The current trade uncertainties, particularly regarding rare earth trade tensions, have heightened risks to the economic outlook compared to a week ago [1][3] - The economic outlook itself has not deteriorated, but risks have indeed increased [3] Group 2: Monetary Policy - The Federal Reserve should not engage in political issues and must maintain its independence, focusing on price stability and full employment [1] - A reasonable target range for the federal funds rate should be approximately two percentage points lower than the current range of 4.00% to 4.25% [1] - The expectation is for two more rate cuts within the year, despite a personal inclination for more aggressive cuts [2] Group 3: Inflation Expectations - The overall Personal Consumption Expenditures (PCE) inflation is expected to decline to 2% within about a year and a half, with housing inflation likely to slow down due to reduced immigration and delayed effects of housing cost adjustments [2] Group 4: Data Dependency - The Federal Reserve aims to rely more on economic forecasts rather than solely on current data, although forecasts depend on data availability [1] - The next Consumer Price Index (CPI) data is scheduled for release on October 24, 2025 [1]

Core Insights - The recent surge in gold prices is driven by expectations of Federal Reserve interest rate cuts, global central bank gold purchases, and ongoing geopolitical risks [1][2] - Concerns about the independence of the Federal Reserve, particularly due to pressure from President Trump, are influencing market perceptions and driving up gold prices [1][2] Federal Reserve Independence - The independence of the Federal Reserve is under scrutiny, with potential implications for gold prices as any perceived intervention could increase risk aversion and weaken the US dollar, making gold more attractive [1][2] - Despite external pressures, the Federal Reserve's independence has not been fundamentally undermined, as evidenced by the recent decision to cut rates with a strong majority vote [2][5] - The latest dot plot indicates a division among Federal Reserve officials regarding future rate cuts, with some expecting additional cuts this year [2][4] Global Economic Context - The shift in international relations, particularly the US's "reciprocal tariffs" policy, is leading to a loss of credibility for the US as a core participant in the international monetary system, which in turn is driving demand for gold as a safe-haven asset [6][10] - The loss of the US's AAA credit rating by major rating agencies has raised questions about the sustainability of the dollar as a reserve currency [6][10] Central Bank Gold Purchases - Since 2016, the pricing of gold has shifted from being driven by "transaction value" to "reserve value," indicating a growing preference for gold among central banks as they seek to diversify away from dollar assets [11][13] - A recent survey indicates that 95% of central banks expect to increase their gold reserves in the next 12 months, the highest percentage since the survey began in 2019 [13][16] - The proportion of gold in central bank reserves has risen to 26.8%, surpassing the share of US Treasury securities for the first time since 1996 [16] Long-term Outlook for Gold - The ongoing issues with the US dollar's creditworthiness and the strategic value of gold are expected to support gold prices in the long term [11][16] - The combination of increasing gold purchases by central banks and the unresolved challenges facing the dollar's credit system suggests a potential long-term bull market for gold [11][16]

Core Viewpoint - The article discusses former President Trump's criticism of Federal Reserve Chairman Jerome Powell and his push for a new chairman who will lower interest rates to 1%, highlighting the tension between political influence and the independence of the Federal Reserve [1][11]. Group 1: Trump's Influence on the Federal Reserve - Trump has openly criticized Powell, calling him an "idiot" for not lowering interest rates from 4%-4.25% to his desired 1% [1]. - The selection of a new chairman is driven by Trump's desire for someone who will comply with his demand for lower interest rates, rather than focusing on economic qualifications [1][11]. - The independence of the Federal Reserve is at risk due to Trump's interference and the pressure he places on the selection process [1][11]. Group 2: Selection Process for New Chairman - The selection process involves discussions with 11 candidates, where the primary question revolves around their willingness to reduce interest rates significantly [3]. - Candidates are also questioned about their approach to handling U.S. Treasury bonds purchased during previous financial crises [3]. - The selection is complicated by the need to find a candidate who aligns with both Trump's desire for lower rates and the criticism of the Federal Reserve's past policies [5][7]. Group 3: Economic Implications - Trump's insistence on lowering interest rates is aimed at improving economic data for political gain, disregarding potential long-term consequences [7][12]. - The article suggests that while lower interest rates may benefit wealthier individuals through asset appreciation, they could exacerbate difficulties for lower-income individuals due to rising inflation [12]. - The credibility of the Federal Reserve may suffer as a result of this political maneuvering, raising concerns about its future effectiveness [12].

Group 1 - The recent surge in gold prices is driven by expectations of Federal Reserve interest rate cuts, global central bank gold purchases, and ongoing geopolitical risks, leading to increased market risk aversion [1][2] - Concerns about the independence of the Federal Reserve have emerged due to President Trump's public pressure and attempts to reshape its decision-making body, which some believe is a key factor behind the rise in gold prices [1][3] - Analysts suggest that if the Federal Reserve's independence is compromised, it could weaken the US dollar and enhance the attractiveness of gold, thereby driving up its price [2][3] Group 2 - Despite external pressures, the Federal Reserve's independence has not been significantly undermined, as evidenced by its recent decision to cut interest rates with a strong majority vote [3][5] - The divergence within the Federal Reserve regarding future interest rate cuts indicates that its independence remains intact, with a likelihood of further rate cuts in the near term [5] - The erosion of US credibility in the international monetary system, particularly following the removal of its AAA credit rating, raises questions about the sustainability of the dollar as a reserve currency, leading to increased interest in gold as a safe-haven asset [6][7][10] Group 3 - The shift in gold pricing from being driven by "transaction value" to "reserve value" since 2016 suggests a long-term bullish trend for gold prices, especially as the cracks in the dollar's credibility continue to expand [11][13] - Central banks have significantly increased their gold purchases, with 95% of surveyed central banks indicating plans to boost their gold reserves in the next 12 months, reflecting a growing preference for gold over dollar assets [13][15] - The ongoing issues with the US dollar's credit risk and the uncertainty surrounding US fiscal policies under the Trump administration are prompting central banks to enhance their gold reserves as a strategic asset allocation move [13][15]

Core Viewpoint - The recent interest rate cut by the Federal Reserve, which was intended to address weak employment data, raises concerns about political interference and the integrity of economic data [1][4][9]. Group 1: Federal Reserve's Independence - Trump's appointment of a White House official to the Federal Reserve's Board of Governors undermines the established independence of the central bank, which is meant to operate free from government influence [3][4]. - The potential for further appointments by Trump could lead to a scenario where the Federal Reserve's decisions are dictated by political motives rather than economic principles [4][7]. Group 2: Employment Data Concerns - Recent employment data has been called into question, with a significant downward revision of 911,000 jobs in the official statistics for the period from April 2024 to March 2025, indicating that previously reported job growth was overstated [4][5]. - The decline in survey response rates and lack of funding for statistical improvements contribute to the unreliability of the data that the Federal Reserve relies on for decision-making [5][6]. Group 3: Internal Disagreements within the Federal Reserve - There is significant division among the Federal Reserve's board members regarding future interest rate cuts, with opinions ranging from two additional cuts to a potential rate hike [6][7]. - The conflicting views stem from the need to balance weak employment data against rising inflation and an overheated stock market, leading to uncertainty in policy direction [7][8]. Group 4: Implications for the Economy - If the Federal Reserve becomes overly influenced by political pressures, it risks losing its credibility as an independent economic authority, which could undermine global confidence in the U.S. dollar and its financial system [8][9]. - The current situation poses a threat not only to the U.S. economy but also to the global economic landscape, as a loss of trust in the Federal Reserve could lead to significant market volatility [8][9].

Core Viewpoint - The U.S. Treasury Secretary has narrowed down the list of candidates for the Federal Reserve Chair from 11 to 5, with the final selection expected to be nominated by President Trump as early as January 2026 [1][3]. Candidate Profiles - **Michelle Bowman**: Current Vice Chair for Supervision at the Federal Reserve, familiar with regulatory affairs [2]. - **Christopher Waller**: Current Fed Governor, known for hawkish monetary policy views and strong academic background [2]. - **Kevin Hassett**: Director of the National Economic Council, former White House economic advisor with a Republican background [2]. - **Kevin Warsh**: Former Fed Governor (2006-2011), criticized quantitative easing, previously an executive at Morgan Stanley [2]. - **Rick Rieder**: Chief Investment Officer of Fixed Income at BlackRock, a Wall Street veteran with significant market influence but no prior Fed experience [2]. Selection Process - Secretary Becerra will lead a new round of interviews for the five candidates, with the process expected to conclude after Thanksgiving due to upcoming international engagements [3]. - A streamlined recommendation list will be submitted to President Trump after the interviews, with the final decision resting with him [3]. Candidate Standards - Becerra prefers candidates with experience in economics, monetary policy, banking regulation, and management, who are open to new ideas regarding Fed operations and monetary policy [4]. - No candidate currently stands out as a clear favorite, but Rieder has made a strong impression due to his extensive experience in fixed income markets [4]. Candidate Views on Monetary Policy - **Michelle Bowman**: Advocates for a proactive monetary policy approach, suggesting that the Fed should act decisively in response to economic conditions, with a preference for a gradual adjustment of interest rates [5][6]. - **Christopher Waller**: Supports interest rate cuts but emphasizes caution in policy actions due to mixed economic signals [8][9]. - **Kevin Hassett**: Stresses the importance of Fed independence from political influence while supporting a comprehensive review of the Fed's mission and policies [10][11]. - **Kevin Warsh**: Calls for a complete overhaul of the Fed to restore its credibility, criticizing current leadership for failing to maintain appropriate interest rates [13][14]. - **Rick Rieder**: Believes there is room for about 100 basis points of rate cuts and questions the diminishing impact of tariffs on inflation [17][18].

Core Viewpoint - The U.S. Treasury Secretary Mnuchin has narrowed down the list of candidates for the Federal Reserve Chair from 11 to 5, with a potential nomination as early as January, although it may not necessarily be for the Chair position [1] Candidate Selection Process - The remaining candidates include current Fed officials Vice Chair for Supervision Randal Quarles and Governor Christopher Waller, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and BlackRock's Chief Investment Officer for Fixed Income Rick Rieder [1] - The Treasury plans to conduct another round of interviews with these five candidates in the coming weeks and months, led by Mnuchin, along with two senior Treasury officials and two senior White House officials [1] - The interview process may extend beyond Thanksgiving due to Mnuchin's commitments to the World Bank/IMF meetings and a subsequent trip to Asia with President Trump [1] Importance of the Nomination - The new Fed Chair will be crucial as the current Chair Jerome Powell's term ends in May, but he still has two years left on his Board seat [1] - The seat previously held by former Fed Governor Kugar is currently occupied by Milan, which will end in January, allowing the new Chair to be nominated to a full 14-year term [1] Selection Criteria - Mnuchin is looking for a candidate who is open to new ideas regarding the Fed's operations and monetary policy, with experience in economics, monetary policy, bank regulation, and management [2] Criticism of the Federal Reserve - Mnuchin has recently criticized the Fed, calling for a review of its policies, structure, and mission, indicating a preference for a candidate willing to reduce the Fed's size and limit the use of certain tools, particularly quantitative easing [3] - Currently, no candidate is in the lead, but Rieder has made a strong impression on Mnuchin, being a well-known figure on Wall Street with extensive analysis of fixed income markets and the Fed [3] - Rieder is noted as the only candidate among the five who has never worked at the Fed, which could be seen as a positive factor [3]