Markets across the board responded sharply to inflation data coming out of the US. US stocks opened lower following an earlier rebound after the June CPI figure came at 9.1% y/y, vs 8.6% in the previous month, topping estimates of 8.8%; core inflation grew by 5.9% y/y. This puts the price increase at the highest level since 1981, adding further pressure for the Fed to hike aggressively by the end of the month. The markets are already pricing in a rate hike of more than 78bps. As a result, the dollar advanced higher, but resistance at 108.5 caused the currency to edge slightly lower, and the 10yr US Treasury yield settled at below 3.00% as market expectations from the Fed remained broadly unchanged. The euro has suffered a swift sell-off, pushing it below the parity against the dollar for the first time in two decades. At the same time, the IMF cut its global growth forecast to 2.3% in 2022, as it raised the unemployment rate estimates until 2025.
Metals fluctuated today as the markets assessed the impacts of multi-decade high inflation and the impact it might have on the Fed’s decision to increase rates later this month. Zinc saw the strongest losses, falling below the key support level of $3,000/t to $2,877/t, the lows not seen since July last year. The metal closed at $2,951/t. Nickel broke below the support level of $21,200/t to close at $21,150/t. Aluminium and copper remained broadly range bound at $2,355.50/t and $7,325.50/t, respectively. Only lead closed marginally higher at $1,954/t. China’s trade surplus hit a record high in June as exports surged following the emergence from the lockdown measures. Manufacturing and logistical issues eased last month, allowing production to ramp up and shipping out of the country to accelerate. However, the rising number of cases across the country and dimming global demand are clouding the outlook for trade.
Oil futures wavered but remained below $100/bl. According to the IEA, Russia continues to earn from its oil exports, as the value rose back above $20bn in June, despite the lower volume in shipments due to elevated energy prices. Precious metals sold off on the CPI data to multi-month lows before shooting back above to settle higher day on day at $1,738/oz and $19.27/oz for gold and silver, respectively.
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All price data is from 13.07.2022 as of 17:30