There probably is not a one among us, apart from the lunatic fringes, who do not wish for the latest ceasefire deal being brokered in the Middle East to bear fruit and the slaughter to stop. Yet, there is always the nagging doubt, bearing in mind the recent attempts toward peace and the millennia of ingrained prejudice, hurt and ultimate intransigence. Israel and Hamas have agreed to the first phase of the Donald Trump mediation with Benjamin Netanyahu convening the Israeli government today to approve the Gaza agreement. Hamas, in turn, announced the accord, spoke on the hostage/prisoner swap and lays the responsibility of success squarely at the feet of the US President by asking him to be the guarantor for Israel’s compliance. Indeed, it will take all the influence of US pressure because, and timelines are hard-judged, Al-Arabiya report that despite the ceasefire announcement, the civil defence in the territory reported several Israeli strikes on the Gaza Strip on Thursday morning. Still, the news has taken the wind out of the sails on what was something of a small oil price revival and despite understandable doubt, if the future holds an end to this current dark episode in this eternal saga, a major geopolitical concern will ease from oil considerations. This news is not a trapdoor moment for our market, the oil community has been developing a thick skin to anything of Gaza nature for quite some time, therefore, the signing of agreements will be greeted with same thoughtfulness as if bullets and bombs find ways into oil-sensitive theatres. But if the mild cynicism is proved wrong, and peace breaks out, the many voices airing views of an imminent surplus will gain weight in grinding at least crude oil values lower.

Gold, because currency is failing

If you have the feeling that the world is slightly out of synch, or its gimbal is not quite on kilter, you are probably not alone. Two wars that are potentially globally catalytic are bad enough but the political intrigue that stalks the corridors of power adds to an already existing worldwide collective feeling that there is little left that can be truly trusted. It is not just the blatant untruths dripping from the mouths of politicians which have been normalised by shrugs of shoulders, it is the pressing and testing of what was once deemed normal practices of behaviour. 

The sight of French President Emmanuel Macron ingloriously hanging on to power despite presiding over four different Prime Ministers since June 2024 might just bring a challenge to government authority not seen since the formation of the 1958, Fifth Republic. His inability to form any sort of consensus or coalition be they so-called right-wing or left-wing means there is no clear mandate for top-to-bottom economic reform which must occur to tackle France’s spiralling debt. Any confidence in French investment is disappearing as quickly as its bond yields rise over those of German Bunds which will eventually mean the ECB will have to act, causing a fallout in the common currency. Even more galling for Gaul is its rating is about to be reassessed by Moody’s at the end of this month and by Standard and Poors in November. 

The originator and first scribe of this report, one David Hufton, was an eloquent critic of Abenomics but it looks as if Japan is about to experience another bout of it, or at least Abe-lite. The Liberal Democratic Party, having won last week’s election is waiting for its leader Sanae Takaichi to be voted in as Prime Minister. If she does achieve election, many analysts predict a revival in part of some of the fiscal and monetary strategies associated with Shinzo Abe as Takaichi, was at least in the past, an advocate of the former prime minister’s economic husbandry. The markets believe that a dovish turn is about to take place in Tokyo judging by the soaring Nikkei and floundering Japanese Yen. The Bank of Japan has been wrestling with raising interest rates and reducing issues of Japanese Government Bonds (JGBs) under duress from a reticent US Federal Reserve to cut its own rates and the debilitating effect of tariffs. How it can act conservatively with a spendthrift Prime Minister will have the BoJ governor, Kazuo Ueda, in fits of vexation. Yet the new Prime Minister does not stand on firm political ground, there is no heavy majority for the LDP in both parliamentary houses and without voting allies, any new shift to looser monies might just be hard to pass as legislation. Political uncertainty in the Land of the Rising Sun makes it less likely to receive the investor support it has enjoyed for the last few years despite what the jubilant Nikkei might suggest.

Last but nowhere near being the least, we eventually arrive in Washington. Well, that is if we are allowed in. The ignominious government shutdown does not need a taking of sides, it is just a disgrace. There are hundreds of thousands of households deprived of their main income because intransigent politicians are sacrificing them on the altar of political expediency, point scoring and dogma. Reams have been and are being written more expertly on this nonsense therefore there is little reason to add to weighty insights or trifle with minutiae. 

However, the point of the French, Japanese and now American examples of high office obfuscating, bamboozling misdirection is how the centres of former safe haven immigration are now the centres of migrative abandonment. The three most important global currencies, the US Dollar, the Euro and the Japanese Yen once stood for solid places of deposit, where consistent governments with consistent outlooks and policies enable worried investors to park their cash in times of strife. No longer. The USA, Europe and Japan are places of combative and intransigent politicians, of stubborn clinging on to power and key reversals on monetary policies that were grinding out success. They are places of huge debt burdens, and inconsistent wherewithal to tackle them apart from of course, borrowing more. Given the global shift from being exposed to the US Dollar because of tariffs and the US’s ability to control global trade and apply sanction at its leisure, relocating into the Yen or Euro does not make any sense whatsoever. If one does not much like being in the Dollar, one will not like being in the Euro or the Yen and if each experience investor depletion, is there any wonder Gold is $4000/ounce?

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