US stocks gained once again after another inflation indicator pointed to a potential peak in interest rates after the July meeting. Producer prices increased by 0.1% y/y, marking the slowest increase in nearly three years, given the combined effect of normalising supply chains, easing demand for goods towards services, and cooling commodity prices. The two consecutive inflation data this week helped to bring on the disinflation narrative while jobs remain resilient. In particular, the initial jobless claims fell to 237,000 in the week ending July 8th. Meanwhile, layoffs fell to the lowest number since December, according to Bloomberg analysis. The dollar breached the strong 100 support level, trading at the lows not seen since April 2022, and the 10yr US Treasury yield is now back at 3.80%.
Metals once again responded positively to weaker-than-expected inflation data, continuing to pare gains, breaking above the key resistance levels. In particular, aluminium strengthened for the fifth straight day to break above the $2,250/t resistance level to close at $2,278/t. Likewise, copper superseded the $8,600/t resistance to hit the June high of $8,710/t. Tin struggled above the psychological level at $29,000/t, closing at $28,809/t. Lead and zinc closed higher at $2,127/t and $2,479/t, respectively. This reaffirms that macro remains key in driving the metals’ prices, and we expect the forward guidance from the Fed following the June meeting to set the tone for the central bank narrative until the end of the year. Once the peak rate is priced in by markets, we expect the focus to shift back to China to help guide the prices.
WTI and Brent edged higher to $76/bl and $80/bl. Gold and silver were also stronger, at $1,960/oz and $24.70/oz, respectively.
All price data is from 13.07.2023 as of 17:30