U.S. data has been progressive in recent days, with the ISM supplier delivery delays declining to 64.9, with price pressures declining as well. The ADP employment change for December was 807k, with the previous month’s figure revised to 505k from 534k. Markit composite and services PMI were expansionary and beat the last months’ figures with readings of 57 and 57.6, respectively. European data slightly below expectations with the Markit services and composite PMI at 53.1 and 53.3, respectively. The dollar index declined today back towards 96 but still holds above this level, the U.S. 10 yr yield holds at 1.6718%, the psychological level at 1.70% is near, and we could have this level tested in the near term.
LME prices were mixed, with aluminium rallying strongly once again and breaking above $2,900/t; however, specs cut their net long position to 118,065, with shorts also declining. Nickel saw the most significant losses after failing above $21,000/t and towards $20,600/t. Copper was again range-bound today, but the cash to 3-month spread is still backwards, although softer than yesterday. Inventories declined across the board today. However, the supplier delays data from the U.S. could indicate that we see the supply chain bottlenecks ease slightly. Iron ore and steel continued to rally in China’s evening session as prospects for Chinese stimulus and looser monetary policy boosts chances for a more upbeat demand outlook than previously thought.
Energy prices continued to push higher following inventory draws in the U.S.; this helps to confirm the market tightness that OPEC+ outlined. Brent broke back above $80bl and trades at $81.53/bl at the time of writing, with WTI at $78.28/bl. Gold edged higher today to $1,824/oz, with silver at $23.10/oz.
All price data is from 05.01.2022 as of 17:12