US stocks weakened and Treasury yields spiked after another month of persistently higher inflation numbers. In May, US CPI figures came at 8.6% y/y, up by 1.0% in the previous month, as shelter, food, and gas took on the brunt of the increase. In the meantime, US consumer sentiment declined in the same month to the lowest level on record, due to continued rises in prices. The shorter dated maturity yields advanced more than the longer term, with the 10yr yield now at 3.14%. The dollar jumped above 103 to test 104. The Fed signalled they are most likely raise interest rates by 50bps during its next meeting this month.
Downward sentiment intensified today across metals, as stronger than expected US inflation figures should cement in more aggressive tightening path from the Fed. Tin saw the strongest declines, falling by more than 4.00% down to close at $35,265/t. Nickel and aluminium both fell by more than 3.00% before settling to close at $27,264/t and $2,6780/t, respectively. Copper losses were much more moderate but the metal managed to break support of $9,500/t to close in line with levels seen end-May at $9,447.50/t. Chile’s mining industry said that the government plan to increase royalties, in particular the ‘ad valorem’ tax introduced in March, on copper producers could dampen the country’s investment. The government is set to announce a broad tax reform by the end of this month, and producers are hoping for the current system to change. Lead and zinc closed lower at $2,148/t and $3,692.50/t, respectively.
Oil declined in line with the broad market, falling below $120/bl. Gold and silver gained marginal ground up to $1,864/oz and $21.88/oz, respectively.
For more in-depth analysis of base and precious metals, our Q2 2022 Quarterly Metals report is out now!
All price data is from 10.06.2022 as of 17:30
