US stocks sold off ahead of the Fed meeting this week as it aims to quell inflation without plunging the economy into recession. VIX is pricing more uncertainty in the near term than in 3 months’ time. The 10yr US Treasury yield jumped to 3.35%, while the 2-year jumped to the rates not seen since the financial crisis 2008. At the same time, the measure of US credit risk surged to the highest since May 2020. The dollar found resistance at 105. Traders are now pricing a 75bps hike in the next meetings, but the central bank is most likely to hike rates twice by 50bps in the next two meetings. Elsewhere, the pound continues to 1.21 under pressure as the risk of a trade war with the EU intensifies. Additionally, the UK economy shrank unexpectedly, falling by 0.3% m/m, and the sharpest pace in more than a year as the government wound down covid-19 testing.
Metals began the week on the back foot after Friday’s inflation data and a lack of demand coming from China. Tin fell more than 7% to close at $32,895/t. Nickel followed suit, breaching support at $26,000/t to close at $25,929/t. Both copper and aluminium declined to multi-month lows, with the latter falling to the levels not seen in six months; both metals closed at $2,638/t and $9,294/t, respectively. Ecuador and Chile have resumed communications over a partnership to develop a major copper deposit. Codelco agreed to suspend two arbitration processes over the Imbabura project, which is conducive to negotiating environment. In the meantime, aluminium on-warrant stocks continue, falling to 186,475, the series lows. Lead and zinc closed lower at $2,098/t and $3,613.50/t, respectively.
Oil futures managed to erase earlier losses, with WTI and Brent trading at $120/bl and $122/bl. Precious metals declined on the back of strong inflation data, with gold and silver trading at $1,830/oz and $21.27/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 13.06.2022 as of 17:30