COMMODITIES: Crude Extends Losses, Copper Rallies On Tariff Threat
Feb-26 19:53
- Crude markets have extended yesterday’s losses today amidst concerns around the US economy following a weak consumer confidence reading on Tuesday.
- Prospects of a peace deal between Russia and Ukraine continue to add to bearish pressure, coupled with talk that tariffs will take effect from April.
- WTI APR 25 is down by 0.2% at $68.8/bbl.
- A bearish theme in WTI futures remains intact, with next resistance seen at $67.75, the Dec 20 ‘24 low.
- Meanwhile, Henry Hub has pulled back to its lowest level since Feb 18 amid the March 25 contract expiry today and weaker demand as temperatures have recovered from last week’s cold.
- US Natgas MAR 25 is down by 6.4% at $3.91/mmbtu.
- In the metals space, copper has outperformed today, after President Trump threatened to place import tariffs on all forms of the metal.
- Copper rose to a high at $475/lb early in the session, before paring some of the move, with the red metal currently up by 1.1% at $458/lb.
- Copper futures remain in a bull cycle, with initial resistance at $488.50, the Feb 14 high, followed by round number resistance at $500.
- Finally, spot gold is broadly unchanged at $2,916/oz.
- A bull cycle in gold remains intact with sights on $2,962.2, a Fibonacci projection. The first key support to watch is $2,882.4, the 20-day EMA.
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CANADA: Median Analyst Eyes 2.5% Terminal For BoC
Jan-27 19:52
- The below table is a summary of analysts reviewed by MNI ahead of Wednesday's BoC decision, unanimously expecting a 25bp cut to take the overnight rate target to 3.00%.
- BoC-dated OIS rates have pushed lower recently but are still more hawkish than the median analyst, pricing a terminal between 2.6-2.7%.
- Please find the full MNI BoC Preview here.
US DATA: New Home Sales Pick Up, But Outlook Remains Subdued
Jan-27 19:40
December's pickup in new home sales was larger than expected, reaching 698k (675k expected) on an seasonally-adjusted annualized rate basis, up from 674k in November (revised up from 664k).
- That marked a 3-month high (and a 6.7% Y/Y gain), with inventories down to 8.5 months worth of sales (from 8.7 prior and a recent peak of 9.4). Median prices for single-family homes rose 2.1% Y/y ($427k, not seasonaly adjusted).
- As with the previous week's stronger-than-expected existing home sales report, this suggested a slight tightening in the housing market at end-year, albeit at subdued levels (especially for existing).
- Some of the improvement may have resulted from the pullback in mortgage rates in the summer, which started reversing in September/October.
- New home sales have been relatively less afftected than those of existing homes, in part because of homebuilder-provided incentives to offset high mortgage costs for buyers.
- With inventories remaining relatively high by historic standards and mortgage rates rebounding, it's unclear how much further homebuilding activity has to pick up in coming quarters: the NAHB's sentiment index, a leading indicator of building permits acitivity, has stabilized since plummeting in mid-2023 but remains below historic averages.
FED: Jan 2025 FOMC Analyst Views: QT Seen Ending Mid-Year (2/2)
Jan-27 19:21
All analysts expect the FOMC to hold rates steady at the January meeting.
- Statement: Changes are seen being limited largely to the first paragraph describing current economic conditions. Most focus is on the labor market language, which – for those analysts who expect statement tweaks – could shift slightly to reflect some stabilization in conditions in recent months, vs previous easing.
- Forward guidance is expected to be unchanged.
- QT: The Fed is seen ending quantitative tightening (more specifically, for Treasuries, with MBS continuing to run off), at some point between March and September 2025 – consensus is for a mid-year (ie June) end.
