US stocks were range-bound today as markets await the Fed’s preferred gauge of inflation, the PCE deflator index, which is forecast to have slowed to 5.1% y/y. Investors are in a wait-and-see mode as they try to project how lingering banking risks, as well as economic factors, will influence the Fed’s decision in the next couple of months. We expect inflation and labour market indicators to continue to drive the sentiment in the near term. This is further supported by the Fed Reserve Bank of St. Louis mentioning that appropriate monetary policy can continue to put downward pressure on inflation. Meanwhile, US consumer confidence ticked higher in March but still remained below the 2022 highs, given the moderate, cautious approach to this year’s macroeconomic outlook. The dollar weakened back to 102.50, and the 10yr US Treasury yield is trading above 3.50%.
Prices bounced back in recent days, following the rest of the riskier assets higher on the back of the stronger risk-on sentiment. Banking sector woes are seen subsiding, adding to the confidence in the market. The key driver behind base metal moves has been China, and while we still hold our optimistic view of recovery true, the positive momentum is being priced further down the curve. Nickel continued on a path of further gains, jumping above $24,000/t to close at $24,074/t. We expect to see more nickel expansion plans into Q2, and China’s refined output is set to increase. Aluminium edged higher, testing the $2,930/t level before closing at $2,389/t. Copper closed at $8,978/t.
In line with equities, oil futures remained flat day on day. Gold and silver gained some ground after support at $1,950/oz and $22.90/oz held firm, respectively.
All price data is from 28.03.2023 as of 17:30