US stocks softened on Monday as markets evaluated the impact of last week’s central bank decisions on the path of inflation and economic growth in developed nations. The big releases that the market will be watching out for are the PCE and GDP from the US and CPI from Europe. While we expect core inflation to soften slightly m/m, the headline reading is likely to remain flat. Further down the line, with oil prices now above $90/bl, the risk of stickier inflation in Q4 2023 is increasing. The dollar jumped above 106, and the 10yr US Treasury yield is now at 4.50%, the high not seen since 2007.
Metals softened today, but the move was marginal despite Chinese property stocks tumbling, driven by a concern of an Evergrande liquidation and its implication on a broader construction segment. Copper was a big mover last week, and this momentum continued into Monday; the metal tested the support level of $8,100/t but struggled below it, closing at $8,145.50/t. While forward price moves remain tight, the spreads continue to widen, with cash to 3-month now near -$70.00/t. The far end of the curve is in a deeper contango, making it more expensive to hold the position. Aluminium remained unchanged at $2,233.50/t. Both lead and zinc traded inside Friday’s ranges, closing at $2,181/t and $2,532/t, respectively.
Oil futures softened while gold and silver sold off, weighed on by the compounding factors of rising dollar and Treasury yields; both metals are now trading at $1,918/oz and $23.12/oz, respectively.
All price data is from 25.09.2023 as of 17:30