US markets jumped higher on Friday after Jerome Powell's speech in Jackson Hole, where he mentioned that it's i time to start adjusting rates, boosting confidence in rate cuts across risky asset classes today. This aligned with market expectations for the first interest rate cut in September, with forward swaps expectations remaining broadly unchanged at 33bps of a reduction. The 10-year Treasury yield weakened to 3.80% while the dollar breached the 101 level on the downside.
The base metals complex finished the week with gains after several weeks of downward pressure. Aluminium has breached the robust $2,500/t mark, and lead, and zinc followed suit. Copper remained suppressed below the $9,300/t level. While metals' prices have been dislocated from macroeconomic shifts in the form of recession fears and monetary policy actions in recent weeks, today's statement from Powell prompted prices to jump higher in the latter half of the day. Still, we do not expect this trend to accelerate in the near term. With low trading activity during the summer, many investors have postponed potential volatility until the fourth quarter, which is typically a more volatile time of the year. In the meantime, we anticipate a slight upward drift in the markets, testing important resistance levels.
Oil futures followed assets higher, with WTI and Brent now trading at $74/bl and $78/bl, respectively. Precious metals benefitted the most as hedges against lower interest rates, with gold jumping back above $2,500/oz and silver gaining to $29.50/oz.
All price data is from 23.08.2024 as of 17:30
