A slew of macroeconomic data struggled to weigh on risk-on sentiment today as US stocks pushed higher on speculation that the tightening cycles might end sooner to prevent a recession. Yesterday, the Fed kept the rates unchanged; however, it provided a clouded outlook in regard to the upcoming meetings. While most policymakers feel that further tightening is necessary, the central bank will continue to watch the data ahead of the decision-making process. The uncertainty about the tightening outlook is likely to bring about greater bouts of volatility following macroeconomic releases as markets adjust their expectations. Subsequently, the ECB increased the interest rates by 25bps, in line with expectations, signalling that a further hike is very likely. As a result, the dollar sold off, falling to 102.40. The 10yr US Treasury yield remained unchanged, while the 2yr yield continued to climb to 4.70%. From the economic perspective, US factory production remained sluggish in May, while retail sales rose to 0.3% m/m in the same period, highlighting continued divergence between manufacturing and service sectors.
Base metals held firm, prompted by further support from Chinese policymakers. This is despite another month of softening economic performance, with retail sales and industrial production slowing to 12.7% and 3.5% y/y, respectively. We expect this data to help recalibrate expectations as to what comes next from China, and given our belief of a stronger push from the stimulus perspective, beyond rate cuts and infrastructure spending, this could provide a much-needed upside boost for base metals. Aluminium struggled to earlier losses, settling at around $2,249.50/t. Copper, on the other hand, saw greater gains by the end of the day, as support at $8,400/t held firm, up to $8,558/t. Lead and zinc closed marginally unchanged at $2,130.50/t and $2,480.50/t, respectively.
Oil futures recovered recent losses, as WTI and Brent strengthened into $69/bl and $74/bl. Gold and silver jumped higher by the end of the day, but they struggled to offset earlier losses, and both metals remained broadly unchanged at $1,955/oz and $23.80/oz, respectively.
All price data is from 15.06.2023 as of 17:30