Gold Flash Crashes, “Jubilant” Germans, And Bank Bailouts

Well, gold plunged $18 in seconds on surging volume (18k contracts in a one-minute window) for no apparent reason, falling from 1,253 to test 1,236, the 200-DMA at around 4 a.m. EST.

That’s being chalked up to a “fat finger,” and the follow through for the dollar and yields was readily apparent, with Treasurys diving to day lows and the greenback surging to day highs:

We also got San Francisco Fed chief John Williams in Sydney. Between his prepared remarks and comments to reporters, there were some notable soundbites. Here are a few:

• “My own view is that a new normal federal funds rate” is probably “something below 3%”
• “So when you think about normalizing interest rates, we don’t have a long ways to go to get back to a normal level”
• “But that’s something we’re going to have to keep watching what happens, reassessing those assumptions”
• “We just need to focus on the data, where the U.S. economy is going, what the outlook looks like. And we could have a funds rate hike at the same time as starting the normalization of the balance sheet at the same time, I don’t think there would be a problem in doing that. Nor do I think there’s any need to do them at the same time”
• “My own view is we should start this normalization of the balance sheet later this year. I think that’s been well telegraphed in the Fed Funds decisions”
• Sees inflation hitting Fed’s 2 percent goal in 2018 after “transitory factors” wane that have been pulling it down
• Williams says 4.3 percent U.S. unemployment rate already below long-run sustainable level by “a fair amount”
• “Very strong labor market actually carries with it the risk of the economy” overheating, Williams says

So that’s basically toeing the party line.

Meanwhile, these two prints are worth noting:

• IFO JUNE GERMAN BUSINESS CONFIDENCE INDEX AT 115.1; EST. 114.5]
• IFO JUNE GERMAN CURRENT ASSESSMENT INDEX AT 124.1; EST. 123.2