Stocks fluctuated in the US and Europe today, ahead of the corporate earnings week and CPI figures out of Eurozone. Fed speakers are also out this week, and we expect the policymakers’ speeches to guide the market to price in 25bps in May. US homebuilder sentiment rose for the fourth straight month as limited housing inventory helped to drive demand for new houses. More housing data is coming out this week, and we expect it to remain resilient, suggesting that the housing sector might have bottomed out. Given our view of a 25bps hike in May being the last one of this tightening cycle, we expect mortgage rates to ease broadly in anticipation of the pivot by the end of the year; while we do not expect a robust recovery, this could provide support for the housing sector for the remainder of the year. The dollar gained ground above 102, and the 10yr US Treasury yield strengthened for the third straight day to 3.58%.
Base metals were mixed, with most of the complex weakening back to fundamental support levels. The exception was tin, which jumped 11% after the key mining region in Myanmar moved to curtail operations, urging the metal to close higher at $27,367/t; nickel was seen slightly higher on the back of it, closing at $24,701/t. Other metals saw broad declines, and in particular, lead weakened back to the $2,100/t support level, erasing three days’ worth of gains to close at $2,113/t. Aluminium weakened to test the support of $2,360/t, but this level held firm, and the metal settled at $2,378.50/t. Tomorrow’s data out of China should point to signs of marginal improvement in comparison to February, given the high-frequency data pointing to continued recovery from the region. We expect retail sales to once again be the beneficiary of growth.
Oil futures remained resilient, supported above $80/bl, at $81/bl and $85/bl for WTI and Brent, respectively. Gold and silver weakened following the sharp rally seen last week; still, our base case for both precious metals to remain elevated, and we expect both metals to find support at around $1,950/oz and $24.00/oz, respectively.
All price data is from 17.04.2023 as of 17:30