US stocks fell at the open today after the release of the US Consumer Price Index (CPI) data, which indicated a sharper-than-expected increase in inflation for March. The headline CPI rose from 3.2% YoY to 3.5% YoY, while the Core CPI held steady at 3.8% YoY. This surge in inflationary pressures was largely attributed to rising service costs, especially in medical care and transportation. Since the beginning of February, oil prices have been on an upward trajectory, with WTI climbing from $72.28/bl to $85/bl and Brent Crude from $81.18/bl to $90/bl, as geopolitical tensions have amplified bullish sentiment. Today's inflation figures, significantly above the 2% target, have dampened the recent optimism among investors, raising concerns that the Fed might postpone interest rate cuts longer than initially anticipated. Forward swaps now suggest a less than 20% likelihood of a rate cut in June. As a result, the yield on the 10-year US Treasury note neared 5%, and the dollar index rose above the 105 level.
Base metals started on the front foot today, continuing on the upward trend that started in recent days. However, the earlier release of the CPI print caused risky assets to reverse these gains, as markets have priced out another case for interest rate cuts in Q2 2024. Copper fell back below $9,400/t; aluminium's upside stalled, prompting prices to hold above $2,400/t. Likewise, tin that was on trend to breach the $32,000/t level was corrected later on in the day back to $32,007/t. Lead and zinc held their ground at $2,175/t and $2,735.50/t, respectively.
Although the 10-year US Treasury yield's increase initially caused gold prices to dip following the CPI announcement, it quickly rebounded, reaching $2,347/oz. Strong purchasing by central banks, coupled with sustained demand from individual investors, particularly in China and India, continue to provide solid support for gold, attracting speculative investors and maintaining high bullion prices. Silver also maintained its strong performance, with another increase today to $28.4/oz.
All price data is from 10.04.2024 as of 17:30
