US stocks continued to decline today amid mixed economic performance. US housing starts registered at 1,382k in December; whilst lower than the previous reading, still above market expectations. Likewise, initial jobless claims surprised on the upside, coming at 190k in the week ending January 14th, testing September lows, underscoring a tight jobs market. The data once again highlights the economy’s resilience to a tighter monetary policy environment, further complicating the outlook for the Fed that is expected to ease the rate of hikes in the next meeting in February. Still, the markets are assessing the mounting fears of easing the global economic environment, and the sentiment failed to hold up during the day. The dollar remained unchanged, and the 10yr US Treasury yield tested the September low of 3.31% before recovering those losses to 3.38%. Likewise, the 2yr yield, which is traditionally more sensitive to monetary policy moves, is edging closer to the 4.0% level.
Mixed base metals performance today, with nickel jumping higher 5.4% during the day on fresh appetite to test the resistance at $29,500/t before settling slightly lower at $29,346/t; however, volumes and open interest have been thin. We expect this to be due to diminishing exposure from Chinese markets ahead of the holidays. Aluminium gave up some of yesterday’s gains, falling for the first time since early January to close at $2,587.50/t; the cash to 3-month spread softened into -$26.30/t. Copper started the day on the back foot before gaining marginal ground to test $9,350/t; the prices struggled above this level, and the metal settled at $9,305.50/t. Lead closed lower at $2,142.50/t, while zinc settled marginally higher at $3,457.50/t.
Oil futures gained in the latter half of the day, with WTI and Brent jumping back above $80/bl and $86/bl. Precious metals gained marginally on a weaker dollar, with gold and silver settling at $1,920/oz and $23.60oz, respectively.
All price data is from 19.01.2023 as of 17:30