The pound is stabilizing today, but nobody seems to think this level will hold, Bill Gross has a warning for investors looking at sovereign debt and gold is predicted to continue rising. With all eyes onjobs report, initial jobless claims data this morning will serve as an aperitif.
The British pound has halted its decline this morning, trading at $1.2980 as of 5:40 a.m. ET, but forecasters are warning that the worst is not over for the battered currency. Analysts at Goldman Sachs Group Inc., Deutsche Bank AG, and Citigroup Inc. say sterling may fall another 7 percent to 11 percent in 2016, with Deutsche Bank seeing $1.15 by the year's end. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has warned that he could relocate a few thousand of the bank's employees from London if Brexit does ultimately happen. In the race to be next Prime Minister of the U.K., a vote among Conservative MPs today will reduce the field to just two candidates.
Former bond king Bill Gross says that sovereign bonds are not worth the risk. Yields in the U.S., the U.K., and Australia fell to record lows yesterday as concerns about the global economy following the Brexit vote pushed investors into safe haven assets. Gross also had a pop at central bank models in his latest outlook for Janus Capital Group Inc. saying that monetary policy makers "worship false idols.”
While bonds are getting a boost as a haven asset, gold has also been staging a comeback. Holdings in bullion-backed exchange-traded funds topped 2,000 tons , according to data compiled by Bloomberg. The precious metal is up over $300 an ounce so far this year, with ABN Amro Group NV, the bank that’s rated by Bloomberg as the most accurate forecaster, predicting a rally to $1,425 an ounce by the end of this quarter. It's not just investors seeking protection that are buying, with the People’s Bank of China adding about 500,000 ounces to its holdings in June as it seeks to diversify its foreign exchange reserves.