Tech rally prompted the US stock market to strengthen once again today, continuing the path of optimism surrounding the belief in the tightening cycle that we have seen in recent days. However, some of the Fed's officials have reaffirmed the stance that the battle with inflation is not over, and we could see rates higher for longer into 2024. Elsewhere, the probability of a cut in the UK has come closer after Chief Economist Pill stated that cuts might be on the table by mid-2024. The probability of a dovish shift is now being priced in March at 16%. The dollar rebounded back to 105.50 after the most recent losses, and the 10-year US Treasury yield held firm.
Meanwhile, base metals gave up some of the recent gains as the complex struggled to have conviction for breaking out of the firm support and resistance levels. We expect this momentum to continue into the year-end. In particular, aluminium struggled above $2,300/t, returning to $2,265/t. Copper remained broadly unchanged day-on-day, at $8,186.50/t. Both lead and zinc continued to gain ground after another day of withdrawals from the LME exchange. The cash to 3-month spreads has remained unchanged in contango, suggesting the market does not see this translating into immediate fundamental tightness. Both metals closed slightly higher at $2,188.50/t and $2,568/t, respectively.
Oil futures are now back below $80/bl and $83/bl for WTI and Brent, respectively. Gold and silver continued to lose some momentum, down to $1,965/oz and $22.50/oz, respectively.
All price data is from 07.11.2023 as of 17:30