US stocks fluctuated ahead of the Fed minutes later tonight, which we expect to point to a higher-for-longer terminal rate environment. With the bulk of the latest interest rate hikes now being priced in, the markets will try to gauge e the policymakers’ outlook in regard to the upcoming meetings in March and May. No big hikes are on the table, but instead, the investors will be paying attention to the rate pivot guidance. Economists now anticipate the PCE gauge to average at 2.4% on an annual basis in mid-2024 compared to 2.3% last month, highlighting the upward stickiness of inflation in the longer term. The dollar tested the 104.40 level, whereas the 10yr US Treasury yield came off slightly following yesterday’s gains. European CPI is out tomorrow and is forecast to edge slightly higher y/y to 8.6%.
Metals suffered today from a lack of demand in China and continued tightening speculations from the Fed. Today’s weakness offset the most recent gains, bringing the metals back to fundamental levels seen last week. Aluminium breached the support of $2,420/t level to trade slightly lower to close at $2,418/t. Copper weakened, testing the support level of $9,050/t but gaining slight momentum to close at $9,112/t. Lead and zinc weakened to close at $2,103.50/t and $3,057/t, respectively. Iron ore futures fell, following a recent rally touching the $140/mt level, as the exchange tweaked trading rules, following a string of warnings from authorities that prices had rallied too far.
Elsewhere, oil extended its longest run of losses so far in 2023, with WTI and Brent weakening to $74/bl and $80/bl. US natural gas futures fell below $2 for the first time since 2020 as markets gave up on hopes of extreme cold boosting winter demand. Gold and silver continued to retest the recent lows of $1,833/oz and $21.63/oz, respectively.
All price data is from 22.02.2023 as of 17:30