The US pared gains as the markets await inflation data this week and its potential impact on the Fed’s tightening path; whilst the 50bps have already been priced in the next two meetings, the trajectory for the rest of the year is uncertain and will largely depend on the impact on economic growth. Data last week pointed to stronger than expected hiring in May, buying the Fed more time to aggressively hike the rate in the next couple of meetings before slowing down the pace to assess the impact on both inflation and growth. The 10yr US Treasury yield broke back above 3.00% for the first time since mid-April. The dollar continues to fluctuate around 102. Meanwhile, the pound remained broadly unchanged, despite the markets assessing whether Boris Johnson would survive the confidence vote later today. At the same time, the ECB announced that it would introduce a new set of QE support if needed to counter borrowing costs for member states, such as Italy, given their concern about the selloff.
Sentiment on the LME improved as it reopened after a 4-day break, with the gradual easing of restrictions in China giving the metals a boost. In particular, copper gapped higher on the open, testing $9,910/t, the April highs, before closing marginally lower at $9,745/t. Aluminium fluctuated but closing higher from last week at $2,782.50/t. US President Biden made an executive decision to boost the solar industry seeking to revive the projects that have been stalled by the trade dispute by imposing a 2-year freeze on solar tariffs for imports; that should benefit metals such as aluminium and silver from industrial uses. Nickel jumped 4% to close at $29,701/t. Zinc and lead closed higher at $3,873/t and $2,214.50/t, respectively.
Oil futures held around $118/bl levels after Saudi Arabia signalled confidence surrounding its global demand outlook, given the improving demand conditions in China. Meanwhile, the US was said to be considering allowing more sanctioned Iranian oil onto global markets to counter the decline in Russian supplies. Precious metals benefitted from the industrial use demand, while gold edged marginally lower to $1,843/oz.
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All price data is from 07.06.2022 as of 17:30