US stocks traded lightly today as investors pay attention to the Fed speech tonight. The Fed committed to a 25bps hike, a bet that was once overshadowed by a pause or even a bigger increase in recent weeks. The next question the markets will be asking themselves is whether this will be the end of monetary policy tightening, and we expect that following the SVB and other banking sector risks, financial conditions have tightened. The dollar remained broadly unchanged, and the 10yr US Treasury yield is at 3.50%; the 2yr yield jumped back to 4.14%. Elsewhere, the unexpected uptick in UK inflation up to 10.4% y/y has brought into question whether the pace of tightening from the BOE is over; forward swaps are pricing in a 22bps increase in interest rates tomorrow.
Some moderate upside was seen across the base metals complex in anticipation of the Fed meeting. Aluminium started on the back foot, but recent support at $2,270/t held firm and the metal bounced higher to $2,286.50/t. Copper solidified three consecutive days of gains, edging back to $8,888.50/t; cash to 3-month tightened into backwardation for the first time since January, suggesting a tightening balance. Lead and zinc closed higher at $2,116/t and $2,866/t, respectively.
Oil futures gained ground, with WTI and Brent increasing up to $70/bl and $76/bl. All precious metals were seen higher; gold and silver are now trading at $1,950/oz and $22.50/oz, respectively.
All price data is from 22.03.2023 as of 17:30