US stocks fluctuated during the day on the back of the inflation figure coming out today. US CPI came in above expectations in August, growing by 3.7% y/y and 0.6% m/m, respectively; petrol prices were the biggest driver behind the monthly increase. While this failed to sway market opinion about a pause for the next week’s meeting, the cuts for next year have been priced in further down the curve, further underscoring the higher-for-longer rate narrative. The probability of a November hike still stands at about 50%. Core reading advanced by 0.3% m/m, marking the first acceleration in six months; however, the yearly growth of 4.3% market the smallest advance in about two years. This data suggests that the path to inflation softness is going to be bumpy; however, we expect next year’s figures to come in lower, given the high base of growth seen this year. The dollar was little changed, and the 2-year yield hovered near the 5.00% mark. All eyes are now on the ECB interest rate decision tomorrow.
The base metals complex jumped higher following the inflation announcement, posting marginal gains on the day. Overall, the market remains rangebound, and we expect this momentum to continue into Q4 2023. The Chinese economy is experiencing softening economic conditions following the reopening rebound; still, our view over the longer term remains constructive. The compounding effect of the fiscal and monetary policy released so far this year is helping to solidify the support level, from which the economy is poised to recover into next year. The growth is likely to be limited in scale, and we expect base metals to follow suit. Aluminium continues to fluctuate around the $2,200/t level, closing just above it at $2,217.50/t. Copper remained comfortably above the $8,400/t level in the latter part of the day, and nickel bounced off the robust support level of $20,000/t. Zinc continued to trace higher to close above $2,500/t, offsetting most of the losses that took place in early August; the metal closed at $2,526/t.
Oil futures remained elevated, while precious metals lost some of their momentum on the back of stronger-than-expected inflation, with gold and silver now trading at $1,910/oz and $22.87/oz, respectively.
All price data is from 13.09.2023 as of 17:30
