US stocks rose on Friday, despite disappointing inflation data and the Federal Reserve's speakers trying to downplay a dovish shift. Fed Chair Jerome Powell stated yesterday that the central bank would not hesitate to tighten further if necessary. While this narrative is expected to help keep yields higher, we do not necessarily expect it to lead to another hike in the near term. The risk-on sentiment struggled to abate, even after the University of Michigan pointed to a 5-to-10-year-ahead inflation expectation reaching a 12-year high of 3.2%. The shorter-term expectation also increased to 4.4%, up from 4.2%. The main reason behind the jump is the expectation of higher energy prices in the near term. This is at odds with current petrol prices in the country, which have been declining since September. The dollar and the 10-year US Treasury yield remained broadly unchanged.
Today, the hawkish sentiment has trickled through to the base metals market, suggesting that macro plays are still being acted out across the complex. However, this impact is expected to be short-lived, and prices of aluminium and copper, the more macro-sensitive metals, are expected to continue to follow a mean-reverting strategy. Indeed, aluminium continued to edge lower to the average of $2,214/t, as copper weakened to $8,035.50/t. Nickel breached the psychological support of $18,000/t, causing it to break sharply down to $17,257/t. Lead and zinc closed lower at $2,180/t and $2,562/t, respectively.
Oil futures jumped higher today, as gold and silver continued to soften, given the weakening impact of safe-haven assets.
All price data is from 10.11.2023 as of 17:30