US stocks retreated after a disappointing economic performance being released today, as we saw inflation and tight market conditions trickle through to the demand side. US retail sales fell by 1.9% m/m, the most significant decline in 10 months, as inflation deteriorated consumer spending. Persistent inflationary pressures, coupled with the omicron-led outbreak, have also caused US consumer sentiment to decline in early January; consumers now expect inflation to rise 4.9% over the next year, vs 2% that the Fed will aim to bring it down to. Likewise, US factory output growth declined in December, driven by material and labour shortages putting pressure on manufacturers. The dollar softened, and the 10yr US Treasury yield jumped higher. Elsewhere, German GDP fell by 1% in Q4 2021, with the last decline seen in Q1, when the economy was through tough lockdown restrictions.
LME prices edged lower after US retail sales declined in December. Copper traded through $9,750/t to close at $9,719.50/t. Zinc weakened back to $3,521/t as data suggests exports improved by 15.6% Y/Y in November, the metal closed at $3,521/t. Aluminium weakened to close at $2,976.50/t. Selling pressure was weaker across the other base metals, but tin continues to hold above $40,000/t, closing higher at $40,351/t.
Oil futures closed the fourth straight week on the front foot, making it the longest-running streak since October on signs of tightening market conditions and resilient demand-side despite omicron risks. WTI and Brent traded higher to $83.00/bl and $85.25/bl. Precious metals have all weakened, with gold and silver falling to $1,818.64/oz and $22.94/oz, respectively.
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All price data is from 14.01.2022 as of 17:30