Wheat Shows Positive Performance in the Past Trading Week, While Most Commodities Declined, Led by Robusta Coffee

Key Macroeconomic Developments:

• United States: The U.S. economy continues to show resilience with mixed signals. The September CPI report showed a 0.2% rise in inflation, slightly higher than expected, bringing the annual inflation rate to 2.4%. This has raised concerns that the Federal Reserve may delay rate cuts. Weekly jobless claims increased to 258,000, higher than the forecast of 230,000, indicating potential softening in the labor market.

• China: The Chinese economy continues to struggle due to weak domestic demand and low consumer confidence. The government has introduced draft legislation aimed at encouraging the private sector's development, hoping to restore investor confidence. Meanwhile, the People's Bank of China (PBoC) has cut interest rates and extended support measures for the real estate sector.

  
  

U.S. Stock Market:

U.S. stocks posted gains for the fifth consecutive week, with the S&P 500 surpassing 5,800 points for the first time, while the Dow Jones reached a record high, rising 0.97% on October 11, 2024. Nasdaq increased by 0.33%. The rally was driven by positive earnings from major banks like JPMorgan and Wells Fargo. Energy stocks outperformed, buoyed by rising oil prices, while utility and non-essential consumer sectors struggled due to inflationary pressures. Softer-than-expected inflation data supported expectations of a potential Fed rate cut in November.

U.S. Dollar Performance:

The U.S. dollar strengthened, with the USD Index reaching a seven-week high as traders bet on prolonged Fed rate hikes. The dollar's strength was bolstered by higher-than-expected CPI data and stable U.S. Treasury yields around 4.02%. However, mixed signals from a softening labor market and geopolitical tensions raise questions about the dollar's future performance.

FOMC Meeting Minutes:

The minutes from the September FOMC meeting revealed that most members favored a 0.5% rate cut. However, some members supported a more modest cut. Raphael Bostic, President of the Atlanta Fed, expressed a preference for holding rates steady, reducing market expectations of an aggressive rate cut in November.

Commodity Market Movements:

• Crude Oil: Oil prices have risen for two consecutive weeks due to escalating conflict in the Middle East. As of October 11, 2024, WTI and Brent crude both increased by over 1%. Since Iran's attack on Israel, oil prices have surged by more than 10%. Concerns over potential supply disruptions persist, with Israel discussing retaliatory measures against Iran.

• Gold: Gold prices saw strong gains during the week of October 7–11, 2024, driven by geopolitical tensions in the Middle East and market expectations of the Fed maintaining high rates for longer. Gold reached $2,264/oz, up 1.25% from the previous week.

• Other Metals: Futures prices for silver, platinum, and copper declined. Silver futures for December 2024 closed at $31.775/troy ounce, down nearly 2%, platinum for January 2025 at $994.4/troy ounce, down nearly 1%, and copper at $4.4935/pound, down 1.8%.

  
  

Agriculture:

• Wheat: Wheat prices rose nearly 1.6%, closing at 599 cents/bushel, driven by concerns over escalating conflict in Odessa, Ukraine, as Russia launched missile attacks on key grain port areas.

• Corn and Soybeans: Corn and soybeans faced declines, with corn falling over 2% and soybeans dropping more than 3%.

  
  

The USDA's WASDE report provided additional insights, with adjustments to production forecasts for corn, soybeans, and wheat.

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