US stocks edged higher following the growing consensus that inflation is nearing its peak and that the pricing in of rate hikes might be excessive. Netflix slumped 30% after the company reported its first customer loss in more than a decade; the biggest drivers behind this were the loss of Russian customers as well rising subscription costs elsewhere. Indeed, there is a trend in households cutting down on subscription-type services to save money, a trend we are likely to see in other non-essential expenses as prices continue to rise. The 10yr US real Treasury yield turned positive for the first time since 2020, signalling a potential return to the pre-pandemic levels; the nominal yield continued to climb, testing March 2018 high of 2.97%. The dollar weakened down to 100. Elsewhere, the ECB’s governing council member Kazaks said that an interest rate hike could take place as soon as July amid continued price pressures.
Mostly a down day on the LME today, apart from aluminium, which gained some ground to close at $3,269/t. Zinc saw the strongest losses as the metal struggled to break above the psychological level at $4,500/t, closing at $4,418/t. Nickel followed suit, closing at $33,505/t. Copper and lead both saw a marginal declines, closing at $10,223/t and $2,424/t. Chinese banks decided to keep the lending rates unchanged once again, with the 1yr loan prime rate held at 3.7%, as the PBoC remains cautious about weakening currency. The scope for China’s easing continues to diminish as the Fed’s aggressive tightening cycle approaches, creating little space to manoeuvre the trajectory of future policy decisions.
Oil fluctuated as US crude stockpiles pointed to the biggest withdrawal since 2021. WTI and Brent are trading at $102.60/bl and $106.73/bl, at the time of writing. Likewise, precious metals wavered, with gold and silver marginally unchanged at $1,950/oz and $25.08/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 20.04.2022 as of 17:30