Daily Brief - 24 May 2024

Gold takes the lead over bonds as debt worries rise

For decades, US Treasuries were the top safe investment, but now gold has taken the spotlight. Investors are turning to gold because they are worried about the growing US debt.

While bonds have lost value recently, gold has hit a new record, showing a 15% gain this year. Central banks, especially in China, are buying more gold and fewer US Treasuries.

Experts say this trend might continue as concerns over the US fiscal situation grow.

Unemployment drops to 215,000 as job market stays strong

Unemployment claims in the US dropped by 8,000 to 215,000 for the week ending May 18. This marks the second week of declines, suggesting a tighter labour market. Analysts had expected 220,000 claims, but the lower number shows fewer layoffs.

Despite past rate hikes by the Federal Reserve, companies are keeping workers due to past hiring challenges. The strong job market has helped the US avoid a recession, with 175,000 jobs added in April.

Economists see this as a sign of economic stability, possibly leading to rate cuts later this year.

Investec allocates £30 million for UK motor finance investigation

Investec has reserved £30 million to cover potential costs linked to the UK's review of past auto loan commission practices. The Financial Conduct Authority (FCA) is investigating discretionary commission arrangements, where dealers could increase interest rates for higher commissions.

Despite this provision, Investec reported higher earnings due to increased net interest income and announced a record dividend.

Other banks like FirstRand and Lloyds Banking Group are also facing significant costs due to the probe. Investec is aiming to boost its return on equity and increase its dividend payout policy.