US stocks held their nerve, slightly unchanged from Friday’s trading, as markets braced for a week full of economic data, Fed speeches, and the start of US earnings season. Forward swaps show that central banks across the board are poised to hike the rates once more in July, with an 88% chance from the Fed and 90% from the ECB for a 25bps hike. While most data releases this week are unlikely to alter market sentiment, US CPI on Wednesday is set to add further volatility to the bond market, as it is expected to fall to 3.1% y/y, marking March 2021 lows. The dollar edged lower, and the 10yr US Treasury yield came back down to 4.0%. Elsewhere, UK labour data might also pose a risk to the market, given the big spillover effect that it had on other asset classes last month.
Metals remained broadly unchanged despite weaker Chinese data released today. Factory gate prices fell to the lows of 2015 on the back of a consistent fall in commodity prices, and consumer prices came in flat, bringing forward a question of stimulus packages. The last time prices were this low, Beijing introduced a 4tr yuan package focused on infrastructure. While that plan bolstered growth at the time, it also caused debt to balloon. This time the case for a focused stimulus rather than a broad package is more likely. We will pay attention to the policymakers’ statement during the July Politburo meeting. Aluminium attempted to breach the $2,155/t resistance three times today but struggled to break above, closing at $2,147/t. Copper fluctuated around $8,340/t today, settling broadly unchanged at $8,372.50/t. Tin continued to give up some of the recent gains, closing at $27,950/t. Lead and zinc remained unchanged, settling at $2,062.50/t and $2,353/t, respectively.
WTI and Brent remained unchanged at $73/bl and $78/bl. Gold and silver were also flat today, at $1,923/oz and $23.06/oz, respectively.
All price data is from 10.07.2023 as of 17:30