US stocks held steady as the markets appeared to be unaffected by the economic data released today. The Fed’s preferred gauge of inflation - the Personal Consumption Expenditure (PCE) index – aligned with expectations at 2.6% YoY in December, unchanged from the month before. Excluding volatile food and energy prices, the index fell from 3.2% YoY in November to 2.9% YoY in the last month of 2023. This suggests that the price pressures continue to subside amid high borrowing costs even as US consumers continue to show resilience. In December, personal spending increased by more than expected to 0.7% compared with the reading of 0.2% recorded in November. This week’s economic data has confirmed the robustness of the world’s largest economy, suggesting there is no immediate need for the central bank to ease monetary policy prematurely. Investors are not anticipating the first interest rate cut before May, and as the current approach of higher-for-longer interest rates continues to bear fruit, we expect the policymakers to stick to a data-dependent narrative at the next meeting. The 10-year Treasury yield increased today and stood at 4.16%, while the dollar index edged lower, trading at 103.4. While we expect the greenback to remain strong, fluctuations are anticipated as it continues to trade at elevated levels.
Another day of lacklustre performance across base metals on Friday, slowing down the upward momentum that carried prices higher this week. Aluminium was the only metal that jumped higher today, with another speculation surrounding a potential ban on Russian material being shipped into Europe, including billets, ingots, and slabs. That caused the metal to strengthen to $2,271/t, still in line with the longer-term average. Copper once again struggled above $8,600/t, trading at $8,547/t. Lead and zinc remained unchanged at $2,155/t and $2,578/t, respectively.
With the first interest rate cut anticipated later than initially expected, precious metals demonstrate a subdued performance. Gold held steady today, hovering around $2020/oz, while silver edged slightly lower and stood at $22.8/oz. Similarly, oil prices remained mostly unchanged, with WTI and Brent crude at $77.4/bl and $82.6/bl.
All price data is from 26.01.2024 as of 17:30