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Gold prices rise above US$3650 as lower interest rates and political uncertainty boost demand
Gold prices have hit an all-time high, surpassing US$3650. This rise is due to factors like potential lower rates from the Federal Reserve and ongoing political instability.
Increased demand for gold also contributes to the climbing prices. Together, these factors are pushing gold prices upward.
The US government is considering reducing earnings report frequency for listed companies to twice a year.
The United States is thinking about changing how listed companies report their earnings. The Long-Term Stock Exchange (LTSE) plans to ask the Securities and Exchange Commission (SEC) to switch from quarterly earnings reports to semi-annual ones. This change aims to lower costs, reduce the workload from earnings calls, and allow company leaders to focus more on long-term strategies instead of short-term goals.
This proposal addresses the challenges that public companies face due to their obligations. There has been interest in such changes for some time. Former President Trump considered it in 2018, and current SEC leaders are open to lessening regulatory demands. LTSE representatives have met with SEC officials and are optimistic about their response.
Impact On US Listed Companies
If approved, these changes would affect all U.S. listed companies and may help reverse the trend of declining public listings. The number of publicly traded U.S. firms has dropped from around 8,000 in 1997 to about 3,700 as of June. Many companies are choosing to remain private or to sell themselves. Although there has been a slight increase in initial public offerings recently, activity is still low compared to historical standards. Big private companies like SpaceX and Databricks are still looking for private funding. Founded in 2020, the LTSE based in San Francisco is committed to creating long-term value. Companies listed on the exchange must focus on sustained investments, engaging with stakeholders, and governance aligned with long-term goals. By pushing for changes like semi-annual reporting, LTSE believes that this could reduce the short-term pressure from the market and make public listings more appealing. As discussions around ending quarterly reporting continue, we should brace for a significant change in market volatility. Instead of regular, expected spikes in volatility during earnings seasons, we may see a longer period of uncertainty lasting six months. We should look out for unusual pricing in options contracts set to expire on traditional earnings dates, such as January and April 2026. The proposal is becoming popular as the number of U.S. listed companies has stayed low, just under 4,000 as of August 2025, while it was nearly 8,000 in 1997. This situation supports the idea that regulatory burdens greatly impact public listings. Hence, this change isn’t just a small adjustment; it could significantly alter how we receive information that affects our trading strategies.Opportunity For Alternative Data Sources
For us, this means reassessing strategies that heavily depend on short-term earnings announcements. The profitable trading of weekly options to catch earnings day moves might happen less frequently. We should explore how options pricing will change with a semi-annual cycle, likely increasing premiums on longer-dated contracts. Although we heard similar discussions in 2018 that didn’t lead to changes, the current regulatory climate seems more supportive of the idea. A significant shift like this could stabilize the VIX index for extended periods, with larger price swings occurring just twice a year. Historically, fewer updates have led markets to react strongly to rumors and minor news events. In the near term, we should expect the market to be more sensitive to alternative data sources and updates between official reports. Sectors that rely heavily on data and are less dependent on earnings calls, like commodities, might be less impacted than tech stocks that rely on guidance. This information gap offers opportunities for those who can analyze non-traditional indicators to gauge market sentiment. Create your live VT Markets account and start trading now.Business confidence in Australia falls to 4, but some sectors show modest improvements
Economic Indicators Overview
The price indicator for purchase costs rose by only 1.1% this quarter, marking the slowest growth since 2021. Retail price growth also dropped to 0.5%, and labor costs decreased from 1.9% to 1.5%. This data signals positive trends in various sectors of the economy. While the drop in business confidence to 4 may seem concerning, the details tell a different story for Australia. Business conditions improved to a long-term average of 7, indicating that companies are performing better than their feelings suggest. We should pay more attention to the concrete data rather than just the headline sentiment. The most important takeaway is the notable decline in inflation indicators from the survey. Purchase costs, retail prices, and labor costs are all growing at their slowest rates since 2021. This aligns with the official Q2 2025 Consumer Price Index (CPI) data, which showed inflation falling to 3.1%, providing the Reserve Bank of Australia (RBA) some much-needed flexibility. Given this cooling inflation, coupled with a strong economy, it seems less likely that the RBA will raise rates further. We should consider positions in interest rate futures that would benefit from a more cautious RBA in the coming months. The chances of a rate cut before mid-2026 have significantly increased compared to last week.Forward-Looking Economic Strength
Looking ahead, the real strength is in the forward-looking parts of the report. For the first time in two years, forward orders are positive, and the employment index has rebounded to +6. This data matches the recent findings from the Australian Bureau of Statistics, which showed that the unemployment rate stayed steady at 4.0% in August 2025, defying expectations for a rise. This “soft landing”—where inflation eases without harming economic activity—is very encouraging for stocks. A less aggressive RBA will lower bond yields, increasing the future value of company earnings. We should think about buying call options on the ASX 200, as the index is likely to adjust based on this positive outlook. In the short term, the Australian dollar may face downward pressure. With the RBA halting rate hikes while other central banks, like the U.S. Federal Reserve, remain cautious, a weaker currency is probable. We should expect the AUD/USD exchange rate to weaken as interest rate differences shift against it. Create your live VT Markets account and start trading now.PBOC sets yuan midpoint at 7.1008, which is different from the estimated 7.1225
The People’s Bank of China (PBOC) set the USD/CNY central rate at 7.1008 today, which is stronger than the expected 7.1225. This rate can vary within a +/- 2% range due to a managed floating exchange rate system.
The yuan closed yesterday at 7.1292.
The PBOC also injected 247 billion yuan into the market through 7-day reverse repos at an interest rate of 1.40%. This caused a net decrease of 8.7 billion yuan in the financial system.
Central Bank Signal
Today, the PBOC sent a strong message by setting the yuan’s reference rate much higher than expected. This move is aimed at reversing the recent weakness of the yuan and warns against aggressively betting against it. As a result, there is a greater risk of a quick, policy-driven bounce-back for the yuan. This decision comes even as economic data shows some weakness. For instance, China’s August trade surplus decreased more than expected to $72.5 billion, and industrial production in July 2025 grew by only 3.9% year-over-year. The PBOC’s commitment to supporting the yuan, despite these mixed signals, shows their priority is stability over short-term economic indicators. We saw a similar approach from the PBOC in 2023 and 2024, when they used daily rate fixing to stop the yuan from falling further. During those times, the USD/CNY exchange rate stayed fairly stable for weeks as the market tested the bank’s commitment. We can expect a similar period of controlled trading with less volatility now.Reducing Bearish Bets
In the coming weeks, we should think about reducing outright bearish bets on the yuan and explore strategies that could benefit from a stable or slightly stronger currency. One effective approach could be selling upside volatility by writing out-of-the-money USD/CNY call options, as the PBOC has indicated a ceiling. Range-bound strategies, such as iron condors, might also be appealing if the currency falls into a narrow trading range. The minor decrease in liquidity from the reverse repo operations supports this position, showing that officials are not overwhelming the market with cheap cash that could be used to bet against the yuan. This highlights their focus on stability over aggressive stimulus for now. We should keep an eye on the spread between onshore and offshore yuan (CNY vs. CNH) to measure the effectiveness of this intervention in the international market. Create your live VT Markets account and start trading now.Canada and China discuss ways to enhance trade ties across different economic sectors
China and Canada have had detailed discussions aimed at improving their trade relations and working together economically. Notable attendees included China’s chief trade negotiator Li Chenggang, Saskatchewan Premier Scott Moe, and Kody Blois, who is the Parliamentary Secretary to the Canadian Prime Minister.
Efforts to Boost Cooperation
The talks show a strong intention to enhance cooperation at both the federal and provincial levels. They covered a wide range of topics, including agriculture and energy, highlighting their desire to strengthen partnerships in various sectors. These renewed trade discussions are likely to benefit the Canadian dollar. Given that the CAD/USD exchange rate has struggled below 0.73 for most of 2025, this news could signal a turnaround. Derivative traders might want to explore call options on CAD futures, as a rise against the US dollar seems possible. Saskatchewan’s premier’s mention points specifically to agricultural products. We are particularly interested in canola and potash futures because China has been a significant buyer in the past. Earlier this year, Statistics Canada reported a 12% drop in canola exports to China. Any signs of improved relations may trigger a notable price increase. In terms of energy, this development is likely to lessen risks for Canadian oil and natural gas producers. The global energy market has been weak, with WTI crude prices dipping below $70 a barrel last month. A stronger trading relationship with China would create much-needed support for demand. Traders could consider selling out-of-the-money put options on major Canadian energy stocks to earn premium.Impact on Market Volatility
We expect this news will also decrease market volatility in Canada. The S&P/TSX 60 Volatility Index (VIXC) has been high, but these talks point to a more stable economic forecast. This situation is favorable for strategies that profit from falling volatility, such as selling strangles on the index. However, it’s essential to remember that similar discussions have not always succeeded, especially during the difficult period from 2019 to 2023. Headlines don’t always lead to rapid policy changes, so traders should use risk-defined strategies. It may be wiser to utilize bull call spreads on relevant sector ETFs instead of buying naked calls, which can limit potential losses if the negotiations do not progress. Create your live VT Markets account and start trading now.Wall Street worried about housing market and economy health due to sharp decline in lumber prices
Wood prices have dropped sharply, raising concerns in financial circles about the housing market and the economy. Futures have fallen by 24% since early August, now sitting at $526.50 per thousand board feet. This decline has been somewhat balanced by reduced production plans from two major North American sawmills.
These price changes are an early sign of housing demand and economic activity, making the current downturn a troubling signal for the market.
The lumber market is sending a strong warning with futures falling 24% since early August. This drop to $526.50 per thousand board feet suggests potential issues ahead for the housing sector. While sawmills are cutting production, this is only a temporary response to falling demand.
This price trend reflects a slowing housing market, as confirmed by recent data. The August 2025 housing starts report showed a 4.5% decline to a seasonally adjusted annual rate of 1.35 million units—the lowest since early 2024. This indicates that builders are scaling back on new projects due to reduced demand.
High borrowing costs are putting pressure on housing. Last week, the average 30-year fixed-rate mortgage was 6.8%, according to Freddie Mac. The combination of falling lumber prices and rising mortgage rates signals a broader economic slowdown. We’ve seen this pattern before, typically leading to weaker consumer spending.
Looking back from our 2025 perspective, we recall the wild changes after the pandemic, particularly when lumber prices soared above $1,500 in 2021 and 2022 before crashing. That time taught us how quickly market sentiment can shift and affect related stocks. The current decline, though less dramatic, follows this known cycle of boom and bust.
For derivatives traders, this is a clear chance to consider bearish positions on homebuilder stocks. Buying put options on ETFs like the SPDR S&P Homebuilders ETF (XHB) could take advantage of a potential sector decline. This strategy directly supports the idea that falling lumber demand will impact builders’ profits in upcoming quarters.
This situation also calls for a cautious approach to the broader market, making it a good time to hedge long portfolios. With production cutbacks in place, we should brace for volatility in the lumber futures market as well. A supply reduction might trigger a short-term price squeeze, making options strategies that benefit from sharp price swings potentially lucrative.
Consumer confidence in Australia drops 3.1% after previous gains, indicating ongoing pessimism
Australia’s consumer sentiment dropped by 3.1% in September, reaching a score of 95.4. This decline follows a significant 5.7% increase in August, which marked the highest level since early 2022.
A score below 100 means there are more pessimists than optimists. Although there was some recovery from the cost-of-living crisis and potential policy easing, concerns about the future persist.
Consumer Confidence Dropped
Today’s decline in consumer confidence, which falls from a 3.5-year high, is worrying. This shift suggests that the optimism seen in August was short-lived, and households are still anxious about the future. We need to adjust our strategies to account for a higher chance of an economic slowdown. This decline in sentiment challenges the Reserve Bank of Australia’s recent stance, especially as they have maintained the cash rate at 4.35% for most of the year. With this quarter’s inflation cooling to around 3.1%, weak consumer sentiment raises the possibility of a rate cut before mid-2026. It may be wise to buy Australian government bond futures to prepare for this potential change in policy. For the stock market, this suggests short-term weakness, particularly in consumer discretionary stocks. Last month’s retail sales showed only a small 0.2% increase, and this sentiment reading supports that this trend is likely to continue. Buying put options on the ASX 200 or specific retail-focused ETFs could be a smart way to protect portfolios against a decline in consumer spending.Market Implications and Strategies
The Australian dollar is also at risk from this news, as a weaker economic outlook reduces its yield advantage. The AUD/USD pair has had trouble holding above the 0.68 level throughout 2025. This situation may provide a new opportunity to sell or initiate short positions through futures contracts or AUD/USD puts. The sudden shift from optimism to pessimism creates uncertainty, which can lead to higher market volatility. We remember that a similar decline in consumer sentiment in mid-2022 led to significant market turbulence. Buying derivatives tied to the ASX 200 VIX index could be a smart strategy to prepare for larger price movements in the coming weeks. Create your live VT Markets account and start trading now.PBOC is expected to set the USD/CNY reference rate at 7.1225
The People’s Bank of China (PBOC) sets a daily midpoint for the yuan, affecting its exchange rate. This system allows the yuan to fluctuate within a specific range or “band” around this midpoint, currently set at +/- 2%.
Each morning, the PBOC calculates a midpoint for the yuan compared to a basket of currencies, especially the US dollar. They take into account market conditions and economic data, which helps guide daily trading.
The Yuan Trading Band
The yuan can move within a +/- 2% range around the midpoint during each trading day. The PBOC can adjust this range if needed. If the yuan approaches the band limits or shows too much volatility, the PBOC may step in. When the PBOC intervenes, it buys or sells yuan to stabilize its value. This intervention helps keep changes gradual, aligning with economic conditions and policy goals. The anticipated USD/CNY reference rate of 7.1225 indicates that the authorities are managing a slow decline of the yuan. This trend has been apparent throughout the summer of 2025, as a strong US dollar, supported by the Federal Reserve’s steady interest rates, has stressed emerging market currencies. This managed rate highlights a preference for stability over a quicker market-driven decline.Implications For Derivatives And Long Term Outlook
For derivatives, the PBOC’s strict management suggests implied volatility will likely stay low in the short term. In 2024, a similar strategy was evident when the daily fix often exceeded market expectations to discourage speculative selling. Selling short-dated options that benefit from low volatility and time decay could be a smart move in the coming weeks. However, the overall economic data tells a different long-term story. In August 2025, China’s export figures showed a 2.1% year-over-year drop, marking three straight months of negative growth. Traders might want to consider longer-term forward contracts or options to bet on a weaker yuan, as the central bank might eventually need to allow for more depreciation to support the economy. The key indicator to watch is the difference between the daily market estimate and the PBOC’s official fixing. Throughout 2025, this difference has often been over 800 pips, showing a strong bias from the bank. If this spread narrows in the next few weeks, it could indicate that policymakers are becoming more comfortable with a weaker currency. Create your live VT Markets account and start trading now.Japanese stocks surged as the Nikkei reached 44,000 following PM Ishiba’s resignation.
Japan’s Nikkei share index has reached a new high of 44,000, while the Topix index has also hit its highest level ever.
Prime Minister Ishiba resigned over the weekend, which may lead to changes in Japan’s leadership. This shift could impact the Bank of Japan’s policies and might weaken the yen.
Falling Government Bond Yields
Japanese government bond yields are decreasing as stock prices rise. The current economic situation indicates growth and possible changes in monetary policy. With the Nikkei exceeding 44,000, there is strong upward momentum. This trend suggests considering long positions, like buying call options on the index, to take advantage of further gains. The index has gained over 20% this year, demonstrating the strength of this rally. A weaker yen is a key factor for Japanese stocks as it increases the value of overseas profits for exporters. The yen has fallen past 155 against the dollar, prompting us to look into currency derivatives that benefit from this decline, such as buying call options on the USD/JPY pair.Political Uncertainty and Market Nervousness
However, the resignation of the Prime Minister brings significant political uncertainty, which could create turbulence in the market. The Nikkei Volatility Index has risen by 15% since the announcement, indicating market anxiety. This suggests that strategies like buying straddles or strangles could be wise, as we may see larger price swings in either direction. All of this hinges on what the Bank of Japan decides next, which is now uncertain due to the change in leadership. We’ve seen expectations for policy shifts in the past, only for the BOJ to maintain its easy-money approach. Any indication of a change, especially with falling government bond yields, will be crucial for our positions. Create your live VT Markets account and start trading now.France’s sovereign rating review is approaching amid ongoing political instability for Macron’s government.
The French Prime Minister recently faced a significant challenge after losing a confidence vote in the national assembly. This has sparked a search for a new Prime Minister. President Macron must find someone acceptable to the different political factions. If he can’t do this, a new election may be necessary.
While this political uncertainty unfolds, Fitch will review France’s sovereign rating on Friday. Despite the turmoil, the euro remains stable, with the EUR/USD exchange rate around 1.1770.
