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Daily Base Metals Report

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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

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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