US stocks showed some strength on Friday, but gains were limited by the expansion of auto plant strikes in the country. Additionally, the core PCE index rose by 0.1% in August, which was less than expected. This, along with Euro area inflation slowing to a 1-year low of 4.5%, alleviated some signs that the high-rate regime could lead the economies into a recession. This is further highlighted by the near-term inflation expectations falling 3.2% from 3.5% in August. However, we believe that with inflation still well above the Fed's target, the narrative for a monetary policy pause will be maintained throughout H1 2024. The 10-year and 2-year yields weakened to 4.55% and 5.04%, respectively. The dollar found support at 106.
Base metals' performance diverged today, driven in large part by stock moves on the LME exchange. Aluminium rallied once again, breaching the resistance level of $2,330/t, after on-warrant stocks fell to a historically low level of 173,000 tonnes. This move was due to large withdrawals seen since Asian depots. Copper jumped higher but struggled above the $8,300/t level and closed at $8,270.50/t. Likewise, zinc upside continued with the metal settling at $2,649.50/t, while lead remained unchanged at $2,171/t. Tin sold off to close at $23,944/t; LME's closing stocks are now at a June 2015 high of 7,350 tonnes.
Oil futures continued to soften, while gold and silver remained low at $1,850/oz and $22.35/oz, respectively.
All price data is from 29.09.2023 as of 17:30