US markets were closed today due to President’s day, but European markets were open but traded in a narrow range. We have seen some downside protection obtained by traders following higher-than-expected inflation readings. ECB governing council Olli Rehn has indicated they will reach their terminal rate in the summer. Data in Europe showed that construction output declined in December by 2.5% M/M and 1.3% Y/Y, respectively. We anticipate this to continue to decline. Consumer confidence in the Eurozone was -19, and if inflation starts to fall, there could be an upside in consumer confidence. However, we do not expect much movement in the immediate term. Currencies consolidated today, except for USDSEK, which saw SEK gain ground into 10.3323. The UK and German 10yr stand at 3.74% and 2.45%, respectively, but the comments from central bank members will continue to move curves accordingly.
Metals prices gained ground today, as the dollar was marginally weaker. There has been little movement in China’s consumption. With US equity futures lower on a softer China, we need to see gains in domestic prices and premiums to indicate robust demand. Local prices are mostly still in discounts, but there has been some moderate strength in aluminium, zinc, and lead ingot prices in East China and Shanghai. There were gains for aluminium as China cut capacity due to energy shortages, and the IAI suggested world aluminium prices declined by 0.6% M/M. Aluminium prices hold above $2,450/t at the time of writing, but the spread is at $38.50/t contango. Copper was also bid to test $9,150/t and trades below this level. Cash to 3s are still in contango at $31/t but tightened marginally from $37.5/t contango. Nickel was bid into $26,920/t, up over 4% daily, with tin gaining over 3% to $26,690/t. Today’s rally was not accompanied by tightness in the spreads, which mostly remain in contango.
Oil prices traded in a comparatively narrow range compared to metals; brent trades at $83.65/oz and $76.84/oz, respectively. Precious metals consolidated today, with gold and silver at $1,843.13/oz and $21.82/oz, respectively.
All price data is from 20.02.2023 as of 17:30