US stocks surged today by the most in two years after the inflation reading came in lower than expected. The dollar sold off to 108.30, and the 10yr US Treasury yield weakened below 3.84%, September lows, as lower inflation eases the pressure on the Fed to hike aggressively. The markets still anticipate a 50bps increase next month, in line with the promise from the central bank. CPI reading grew by 7.7% y/y, vs the market expectations of 7.9%, and core has also come down from last month’s peak to 6.3% y/y.
Commodities benefitted from the inflation reading today, with base metals seeing strong rallies in the latter part of the day. Overall performance was broadly positive as a result. Aluminium jumped higher to test the resistance at $2,340/t before edging slightly lower to $2,327/t, settling marginally unchanged day-on-day. Likewise, copper jumped above $8,200/t, but resistance at $8,300/t triggered a small correction back to $8,271.50/t. Nickel broke above $25,000/t, the level it struggled to breach since mid-September. Both lead and zinc advanced to close at $2,098/t and $2,884/t, respectively. From the fundamental standpoint, Chinese consumption remains lacklustre, and the outlook of weaker growth is set to continue into the year-end after government officials reiterated their resolve to keep the tight lockdown conditions in place in the meantime.
Oil futures edged higher as a result, with WTI and Brent now trading at $86/bl and $93/bl. Precious metals all benefitted from a softer CPI reading, with gold and silver jumping to $1,749/oz and- $21.56/oz, respectively.
All price data is from 10.11.2022 as of 17:30