US stocks fluctuated today at the start of the week that will bring major central banks’ interest rate decisions. While the Fed will likely leave the interest rates unchanged this week, the policymakers’ narrative will be watched closely to assess the timing of future rate cuts. We expect the Fed to reiterate the importance of higher interest rates for longer to avoid cut expectations becoming a self-fulfilling prophecy. The dollar strengthened, breaching 104.15 level, while the 10yr US Treasury yield jumped higher to 4.26%. Elsewhere, there has been a repricing in eurozone interest rates with more rate cuts expected next year as inflation softens at a quicker pace than predicted by the policymakers. Markets are not expecting a change in interest rates from the ECB nor BoE, but all eyes will be on the policymakers’ rhetoric regarding timing of possible rate cuts next year.
Elsewhere, a more downbeat sentiment is growing across Asian markets following a sharp price decline in China, both from CPI and PPI contracted, bringing forward speculations that the Chinese government might step up the support. This added to a slow start for the base metals complex this week, with dollar strength keeping a lid on prices. CPI numbers and the FOMC might bring some noise later on in the week; however, with the end of the year approaching, the longer-term volatility is poised to quiet down. This is especially true if data comes in line with expectations. Aluminium continued to break new lows, closing below the $2,125/t level at $2,117/t. Likewise, copper is once again struggling above $8,400/t, edging lower to $8,341/t. Zinc saw a narrow range as it struggled to break below the $2,400/t support, closing higher at $2,407/t. Likewise, lead jumped back above $2,050/t to $2,057/t.
Precious metals continued on the downside with gold depreciating to $1,982/oz, and silver falling to $22.76/oz. WTI and Brent remained mostly flat at $71.02/bl and $75.70/bl, respectively.
All price data is from 11.12.2023 as of 17:30