US stocks fluctuated after Jerome Powell’s speech warning that higher rates might be necessary to combat inflation. He further stated that it makes sense to continue moving rates higher in the coming months but at a more moderate pace; however, the timing of the hikes will depend on the incoming data. While the forward swaps are pricing in 19bps of increase in July, we do not yet see clear signs creating a case for further tightening. Inflation is softening at a healthy rate, and the labour market is tight enough to withstand an economic slowdown without triggering the case for abrupt wage increases. Growing uncertainty regarding the path of the Fed’s monetary policy brings us into sentiment-driven territory, and until the next meeting, we expect to see heightened volatility in the markets, especially the dollar and near-term Treasury yields. In the meantime, the dollar softened slightly to 102.36, and the 2yr yield held firm at 4.75%.
Metals fluctuated sharply today as markets struggled to sway in either direction. Copper continues to hold above the $8,500/t level, closing at $8,602.50/t. Aluminium edged lower, testing the robust support level at $2,200/t; the market rejected prices below this level and bounced back to $2,223/t. Construction-heavy metals, nickel and zinc, diverged drastically in their performance today, with the former declining more than 3.0% on the day, below $22,000/t to close at $21,238/t. Zinc reversed earlier losses, closing at $2,416/t.
Oil futures, in line with base metals, wavered but held firm above $72/bl and $76/bl for WTI and Brent, respectively. Gold and silver remained low at $1,931/oz and $22.72/oz.
All price data is from 21.06.2023 as of 17:30