U.S. equities rallied as risk appetite improved and tech stocks gained ground. We saw elevated volumes due to expiry on Friday morning; according to Bloomberg, $3.5trn of single-stock and index options were expiring. The U.S. yield curve saw an inversion between the 3yr yield and the 5yr yield, as the 3yr yield broke above the 5 yr. Some traders see the inversion as a sign of a recession. The 10yr yield has softened marginally back to 2.15% at the time of writing, and we also saw the USD weaken moderately and trades at 98.184 after struggling at 98.60. Existing-home sales in the U.S. declined M/M to by 7.2%, at 6.10m. The trade balance for Europe was down 7.7bn (seasonally adjusted), with labour costs rising 1.9% Y/Y. EURUSD declined to 1.1058, as we saw more USD strength as the European economy is on thin ice.
LME prices saw all but nickel gain ground, and nickel was limit down once again, with prices breaking to $36,915/t. Tin prices were well bid after a poor performance on Thursday, and the 3-month future reached $42,305/t and the cash to 3-month trade at $54/t. Copper was supported around $10,200/t to settle at $10,331/t, the cash to 3-month spread trades at a mild contango at -$4; the LME came under pressure to ban Russian copper but resisted these suggestions. This could be attributed to the low inventory environment and tight fundaments. Aluminium was bid to test $3,460/t but settled near unchanged at $3,381/t; reports suggest that aluminium production in China is steady despite COVID. We have seen cases spike, but factories are allowed to continue as long as their workers form a bubble; in our opinion, this will limit the downside to metal production. Liquidity across the metals and commodities markets remains a threat to price action; this will certainly continue in the near term due to increased margin requirements and stress on credit facilities.
Energy prices firmed with Brent and WTI reaching $107.69/bl and $104.76/bl, and the U.S. rig count declined despite high prices and supply-side pressures from the war in Ukraine. Gold and silver prices were weaker, trading at $1,929/oz and $24.95/oz.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 18.03.2022 as of 17:30