US stocks edged higher into a quiet start to the week as markets await monetary policy decisions from key central banks. Both the Fed and the ECB are expected to raise rates by 25bps, with another 25bps from the ECB into the year-end; Fed’s outlook remains uncertain. The Fed is in a delicate position, where it cannot be jeopardised by elevated core inflation expectations once again, and in line with market expectations, policymakers are more likely to hike again. Since the market is pricing in the last hike in July, at least until Q4 2023, the dollar could see weakness build into the week-end. Resilient corporate earnings results might prop up stocks, but all eyes are on the Fed and subsequent minutes. The dollar edged higher, and the 10yr US Treasury yield is at 3.80%. The euro continued to weaken on the back of softer-than-expected PMI figures, and instead, European bonds gained ground.
Metals’ space is becoming interesting once again: ranges are expanding, with prices looking to break out. And while recent days’ trading was mostly driven by dollar moves, today’s strength in the greenback failed to hold prices back. Lead, in particular, saw another day of robust gains, breaking above the $2,150/t resistance level to close at $2,175/t, the June high. Zinc also tried to break higher but lacked momentum above $2,430/t once again to close at $2,417/t. Aluminium and copper remained broadly rangebound, finding support above $2,200/t and $8,400/t to close at $2,209./t and $8,517/t, respectively. In the meantime, the market is awaiting the outcome of July’s Politburo meeting. Policymakers are most likely to fail on the big stimulus, but the market is now pricing it in. Still, a moderate downside during the week should persist.
Oil futures continued to post broad gains, with WTI and Brent now at $79/bl and $82/bl. Gold and silver edged slightly lower but remained elevated above $1,960/oz and $24.45/oz, respectively.
All price data is from 24.07.2023 as of 17:30