Inflation Meets Expectations as Energy and Metals Continue to Climb

With US inflation arriving as expected, markets have been somewhat choppy this morning, although index futures continue to point towards a positive open. Energy and metals contracts are also extending their steady climb.

US consumer prices increased 3.4%, matching expectations and easing from the previous reading of 3.5%. The report indicated that inflation pressures remain elevated but steady.

It is a busy day for Canadian earnings. Constellation Software, Air Canada, Maple Leaf Foods, and Hydro One all beat expectations. Grocer Metro reported earnings in line with expectations, although headline and same-store sales declined from a year ago.

NASDAQ futures are up 0.7%, while Dow futures are up 0.2% Overseas, Japan’s Nikkei gained 0.8%, while Hong Kong’s Hang Seng declined 0.8%. In Europe, Germany’s DAX is up 0.4%, while the UK’s FTSE is down 0.1%.

Commodities remain active. Crude Oil is up 0.6%, approaching $83.75/bbl, while Brent Crude has gained 0.2% and is approaching $90.00/bbl. Gasoline is down 0.2% but remains above $3.10/gallon.

Metals continue to strengthen. Gold is up 0.5%, trading above $4,450/oz, while Copper has gained 0.6% and is trading near $6.65/lb. Silver is up 1.9%.

In fixed income, the US 10-year Treasury note yield has slipped back towards 4.65%, while the US 30-year Treasury note yield remains steady below 5.25%. The US Dollar Index is down slightly. The Euro and Loonie are both steady.

Looking ahead, US producer prices are due on Thursday, followed by retail sales on Friday. This week’s earnings calendar remains dominated by a large number of small- and mid-cap companies.

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