US stocks continued to pair gains after another significant decline in bond markets. After hiking interest rates by a quarter-point a week ago, Fed Chair Powell signalled that another rate hike is likely during its next meeting in May and, if needed, would increase rates by 50bps. The markets are now pricing in about seven 25bps hikes to be implemented in the remainder of this year. The 10yr US Treasury yield continued its rally, jumping above 2.35%. The dollar softened. Elsewhere, China’s economist pushed back their expectations for another cut in RRR, as the government abstained from clarifying the monetary policy outlook after the previous meeting, where the rates remained unchanged.
Mostly a down day on the LME markets, only with lead higher on the day, closing at $2,275.50/t. Nickel traded within market limits today for the first time since the squeeze, and we saw increased volumes as investors slowly returned to the market. The metal fell by nearly 10% during the day, falling to close at $28,159/t. SGX iron ore futures continued yesterday’s decline following the news that emergency controls were implemented on roads in Tangshan to limit the spread of the virus; the metal now trades at $144.80/mt. Logistical issues are bound to continue to worsen as China continues to contain individual regions, significantly cutting activity in the area. Everywhere else, the declines were much softer, with aluminium down marginally to close at $3,504.50/t. Likewise, copper fluctuated, finding support at $10,234/t before settling into $10,268/t. Zinc and tin closed lower at $3,888/t and $41,394/t, respectively.
Oil futures reversed yesterday’s gains after Germany halted Europe’s potential decision on the embargo of Russian oil. According to the Fed Reserve Bank of Dallas, the global economy will not be able to avoid recession unless Russia continues to export its energy reserves, while replacing this supply in a timely manner will be challenging. WTI and Brent softened into $110.26/bl and $114.37/bl. Gold and silver slid on hawkish Fed, down to $1,920/oz and $24.77/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 22.03.2022 as of 17:30