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Despite the recovery we have seen in the last two days, US stocks continued to decline, ending the week on the back foot. The US employment costs, the Fed’s gauge of wages, rose by 4% y/y in Q4, the most in two decades as employers competed for workers. Meanwhile, US inflation-adjusted consumer spending fell in December by 1% m/m, the biggest decline since February 2021, as consumers chose to spend less during the latest omicron outbreak; the PCE price gauge rose by 5.8% y/y, the most since 1982. The dollar softened, and the 10yr US Treasury yield broke below 1.80%. Elsewhere, euro area confidence fell to a nine-month low in January, while Germany GDP shrank in Q4.

After the Fed statement confirming the timing and the speed of the tightening this year, the metals came under pressure, and the stronger-than-expected Q4 GDP performance alongside persistent labour costs strengthened the case for further interest rate hikes, putting pressure on the base metals group despite dollar softness today. Lead saw the biggest losses, falling below $2,270/t to close at $2,265/t, with the cash to 3-month spread at $8.50/t. Copper prices weakened as well, falling to close at $9,507.50/t and cash to 3-month spread is at $50.00/t. Nickel was range-bound, but closed marginally lower at X. Only iron ore gained ground, jumping above $146/mt, the August 2021 highs, on a continued sentiment that Chinese stimulus will support the economy and, in turn, the construction outlook; the next day trading, however, erased most of the gains back to $140/mt.

Oil futures closed the week on the front foot, despite setbacks during the week, with WTI and Brent trading at $87.60/bl and $90.69/bl, respectively. Precious metals continued to decline, with silver selling off to $22.17/oz, while gold was marginally softer at $1,783.50/oz.

For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.

All price data is from 28.01.2022 as of 17:30

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