US stocks fluctuated on Friday finishing another week on the front foot. Markets have been pricing at the end of the tightening cycle from the Fed, and while we expect this narrative to prevail into the year-end, the risk-on momentum is likely to fade in the near term. As mentioned in our previous reports, we expect that once the path of monetary policy is fully priced in, further weakness from the macroeconomic perspective should weigh on riskier assets as market focus shifts to economic growth rhetoric away from central bank centric. US housing starts came in above expectations, growing to 1,372k in October despite the continued decline in housing demand. The dollar remained above 104 while the 10-year US Treasury yield dropped below 4.50% for the first time since September.
Base metals remained broadly unchanged today, keeping the mean-reverting strategy intact. We have seen macro plays being acted out in aluminium and copper in recent months; however, given macroeconomic data has been coming out in line with expectations, its impact on prices has been marginal. Instead, we have seen copper follow the dollar moves closely; the metal closed at $8,267/t. More fundamentals have been at play for other metals. Nickel continued to soften, falling below the robust $17,000/t level as concerns surrounding oversupply of Class 2 worldwide continue to weigh on prices. Lead and zinc have been heavily subject to stock moves on the LME. Lead continued to strengthen for the fourth straight day to settle at $2,294/t.
Oil futures bounced back after yesterday’s losses to $75/bl and $80/bl for WTI and Brent, respectively. Gold and silver remained unchanged day to day.
All price data is from 17.11.2023 as of 17:30