US stocks closed the week on the front foot, with S&P 500 closing the seventh consecutive day higher and marking highs not seen since April 2022. The expiration of options contracts led to higher volatility during the day. Some Fed officials reiterated today the need for further tightening to help reduce inflation and slow the pace of the labour market. As of Friday, forward swaps are pricing in 17bps in July, down from 21bps seen at the start of the week. However, at the same time, the market has completely priced out the case for cuts later on in the year. US year-ahead inflation expectations fell to 3.3% in early June, a 2-year low, while longer-term expectations eased slightly, highlighting the stronger case for inflation easing in the latter part of the year. The dollar found support at 102.20 today, and the 10yr US Treasury yield remained unchanged.
Likewise, base metals closed another week higher as markets increased their bets for further stimulus from China. Iron ore remained steady above $110/mt, and nickel tested the resistance of $23,400/t, a level not seen since the start of May. Copper continued to edge higher, gaining ground for the fourth straight day, testing the $8,600/t level to settle at $8,566.50/t. Aluminium gains were more moderate, keeping the longer-term range of $2,200-2,300/t intact. We have seen market focus shift from the supply to demand story in recent weeks, and continued weakness from the consumption side has weighed on sentiment as the supply side in Yunnan is seen normalising. Lead and zinc closed at $2,141/t and $2,478/t, respectively.
WTI and Brent futures remained broadly unchanged after yesterday's gains, holding firm above $71/bl and $76/bl. Gold and silver closed the week unchanged at $1,958/oz and $24.00/oz, respectively.
All price data is from 16.06.2023 as of 17:30