US stocks rose on the open, driven in large by optimism seen in Chinese shares, as risk-on sentiment prevailed. Markets are awaiting remarks from Fed officials alongside the PCE deflator index release tomorrow to help gauge the outlook. The spread between 2yr and 10yr yield, a recession gauge, narrowed back to -50bps from -100bps seen a couple of weeks ago, suggesting that while the threat of imminent recession has subsided, the economy is not out of the woods just yet. Still, the Fed lowered its GDP projection for 2023 to 0.4% from 0.5%. We have seen investors rein in their appetite even after banking sector woes have calmed, and many are braced for a high-impact event this year, suggesting confidence has been dented. The dollar edged higher after 102.50 support held firm and the 10yr US Treasury yield settled at 3.55%. From the macro front, US home pending sales rose by 0.8% in February to reach the highest level since August; this marks the third consecutive month of growth as the market is seen stabilising after a turbulent year. At the same time, US 30yr mortgage rates dipped to a 6-week low of 6.45%, which should help advance another round of home purchase applications.
Another day of positive gains was seen across the base metals complex, but momentum slowed slightly in the latter half of the day, and most metals closed unchanged today. Aluminium jumped higher to test the resistance of $2,420/t, but it held firm, and the metal came back to close at $2,380/t. A protracted recovery in the downstream demand for aluminium led to a rapid destocking of social inventories; the levels now stand at 1.21m mt as of March 16th, down 58,000 mt from early March. Likewise, LME stocks continued to decline and are now at 529,175mt; the cash to 3-month spread tightened back to -$40/t as a result. Copper followed suit, gaining ground to test the $9,050/t but edging back to $9,002.50/t. Lead and zinc closed higher at $2,138.50/t and $2,968/t, respectively.
Oil futures were once again little changed on the day. Gold and silver also found comfort at current levels of $1,966/oz and $23.30/oz, respectively.
All price data is from 29.03.2023 as of 17:30
