US stocks weakened on the back of hawkish comments from some of the Fed’s policymakers. Indeed, St. Louis’s President Bullard spoke in favour of further rate hikes to fight inflation. Meanwhile, Fed’s Bostic said that raising rates one more time and holding them above 5.00% should help curb price growth. Forward swaps are now pricing in a 22bps hike in May. This is further supported by data out of BLS, suggesting that median weekly earnings of full-time wage and salary workers are rising at a faster pace than inflation, at 6.1% y/y in Q1’23; wages usually lag inflation gains by two years, and we expect to see resilient gains in earnings in the coming months. The dollar weakened back below 102, and the 10yr US Treasury yield settled at 3.57%. Likewise, UK wage data pointed to a faster-than-expected growth of 6.6%; CPI data release tomorrow will help reaffirm the BOE’s outlook in the coming weeks.
Metals were brought higher despite more hawkish sentiment from the US after China growth figures pointed to further resilience in the consumer segment. China’s GDP grew at the fastest pace in a year, up by 4.5% y/y in Q1’23, putting the government on a more likely path to hit the 5.0% yearly target without the addition of excessive stimulus. While industrial output rose at a slower pace, 10.6% growth from retail sales added to positive risk-on sentiment. Aluminium benefitted, jumping back above $2,400/t to close at $2,437/t, breaching recent highs to test early-March levels. Nickel’s moves were also robust, as the metals gained ground for the 7th straight day, breaching robust resistance of $25,000/t to close at $25,633/t. Nickel cash to 3-month spread tightened strongly in recent days, jumping to -$66/t, the highs not seen since September. The fact that it is still in contango indicates that concerns about the supply have tightened but not enough to impact the overall market. Lead and zinc closed higher, at $2,145/t and $2,871/t, respectively.
Oil futures fluctuated around $81/bl and $85/bl levels for WTI and Brent, respectively. Gold and silver benefitted alongside other precious metals, trading at $2,008/t and $25.20/t, respectively.
All price data is from 18.04.2023 as of 17:30