Another risk of day yesterday for the majority of financial markets. US equities are unchanged at the time of writing, the VIX spiked towards 25 but stands at 21.40, and is on track for the biggest rise since January, but option expiry is certainty having an impact. Investors are looking to remain cautious about the Fed tapering their asset purchases. The dollar continues to strengthen and the index trades at 93.401. Data in the U.S. saw initial jobless claims at 348,000, mortgage delinquencies for Q2 were 5.47%, down from the previous quarter at 6.38%. In Europe, the sell-off in equities was more pronounced, the euro volatility curve flattened as gamma was bid ahead of Jackson Hole next week, the front-end of the curve is expected to remain firmer.
LME prices tumbled today due to risk-off sentiment from the Fed and a stronger dollar. Protracted selling pressure saw tin test support at $31,500/t, but settled at $33,118/t. Nickel was next in line, down over 2% and broke through support at $18,500/t to close at $18,385/t. The lead cash to 3-month spread remains in steep backwardation and settled at $208/t, the flat price stands closed at $2,260/t. Zinc failed above $2,900/t and closed at 2,951.5/t. Aluminium was comparatively muted and closed at $2,545.50/t after testing appetite at $2,516/t, but the cash to 3-month spread tightened into $16.76/t. Copper was weaker again today as traders rejected $9,100/t and the market closed at $8,894/t.
Energy prices tumbled today due to the stronger dollar and reports that Saudi may delay supply increased, following the recent correction. Brent and WTI trade at $66.21/bl and $63.42/bl at the time of writing. Precious metals were weaker today, silver trades at $23.27/oz with gold at $1,781.17/oz.
Geordie Wilkes, Head of Research
