US stocks opened higher today after the release of Consumer Price Index (CPI) data, which highlighted a rise in price pressures for February, mainly driven by escalating energy and housing costs. The headline inflation rate was at 3.2% YoY, slightly above the anticipated 3.1%, while core inflation—which excludes volatile food and energy prices—eased to 3.8% YoY from 3.9% YoY, narrowly missing the forecasted 3.7%. YoY. Although inflation has receded from its mid-2022 peak, it continues to significantly surpass the Fed’s 2% target as the central bank gears up for its two-day policy meeting next week. This inflation data has tempered the recent wave of optimism among investors, stoking concerns that the Fed may delay interest rate cuts longer than the markets had hoped. Consequently, the yield on the 10-year US Treasury note rose to 4.146%, and the dollar index climbed back above the 103 mark.
Base metals edged slightly higher today, continuing on yesterday’s gains. While the recent narrative has been driven mostly by a softer macro picture, today’s upside, despite the dollar breaking back above the 103 level, suggests that the appetite for higher prices is building across the complex. In particular, nickel continues to post broad gains, holding comfortably above the $18,000/t level, while testing the resistance at $18,500/t today. Likewise, aluminium and copper are testing their robust resistance at $2,270/t and $8,700/t, respectively, indicating that there is an increasing push to break out of these ranges. If these levels are breached, it could trigger strong gains. This is further supported by growing COT positioning for both aluminium and copper, with the latter reaching the highest level in 3 years. Elsewhere, lead continued to strengthen, holding above the $2,100/t level.
The surge in US Treasury yields was accompanied by a drop in precious metal prices. Gold dipped to $2,163/oz, with silver experiencing a similar decline to $24.00/oz, only to recover to $24.22/oz. Oil prices, on the other hand, remained consistent within their prevailing ranges, with WTI and Brent crude trading at $78.20/bl and $82.50/bl, respectively.
All price data is from 12.03.2024 as of 17:30
