US stocks opened higher today, kicking off a week packed with key economic data releases. The upcoming Friday Non-Farm Payrolls report will be a focal point for market participants, offering insights into the labour market's strength and helping gauge the likely pace of the Fed's monetary easing going forward. The recent surge in support for Trump and anticipation of his inflationary policies have driven the 10-year yield close to 4.3%. In our view, bonds are currently undervalued, especially with forward swaps indicating a 96% probability of a 25bps Fed rate cut next week. After nearing 104.5 in recent days, the dollar softened slightly today, standing at 104.27. Across the Atlantic, UK markets are awaiting the debut budget from the Labour government, set to be delivered on Wednesday.
The metals market was mixed today. Lead and nickel drifted lower to $2,030.50/t and $16,015/t, respectively, due to lower open interest and a lack of trading activity, resulting in a muted price performance. On the other hand, zinc and aluminium continue to see spread volatility, keeping 3-month prices elevated relative to the broader market. We expect to see lower liquidity this week as markets await the outcome of China’s legislative meeting and the U.S. elections next week, which is likely to lead to sideways trading. At this time, we do not expect the market to be overly short of the entire complex.
Gold edged slightly higher but once again struggled to break the $2,750/oz level, with high bond yields curbing its performance. Similarly, silver tested the $34 level again but held at $33.70 at the time of writing. Oil prices traded lower today, with WTI and Brent crude at $68.10 and $72.20, respectively.
All price data is from 28.10.2024 as of 17:30
