US stocks declined today following the disappointing earnings results from the investment banks, further adding to recession worries. In the bond market, the 30-year bond yield jumped over the 5-yr one, another signal of curve inversion that historically was a precursor to an economic recession. In the meantime, the gap between 2- and 10-year yields deepened further as markets expect another aggressive hike from the Fed. Mortgage rates continued to edge higher after the recent slowdown, as the 30-year mortgage rate exceeded 5.5%. US initial jobless claims increased to the highest level since November of 244,000 in the week ending July 9th, which included the holiday week in the country. If persistent, this could point to appearing cracks in the labour market. Meanwhile, PPI prices grew by 11.3% y/y in June, above expectations, with ¾ of the advance driven by goods, including energy; excluding volatile components, producer inflation increased by the smallest amount since November. The dollar tested 109.20 while the 10yr US Treasury yield is struggling to gain footing above 3.00%.
Metals priced in the dollar strength and the impact of tighter monetary policy in the US, as the base metals group sold off across the board to new lows. The strongest losses were seen in nickel, which fell by more than 7% down to $19,402/t, the level not seen in eight months. Lead followed suit, declining by 6% before finding support at $1,800/t, the November 2020 lows, and closed at $1,833.50/t. Aluminium and copper losses were much more moderate, but both metals continued to break robust support levels; both metals closed at $2,336.50/t and $7,170/t. Zinc closed lower at $2,875/t.
Oil futures fell further as recessionary worries escalated, pushing the WTI and Brent prices back down to before the Ukrainian crisis to $94/bl and $97/bl. Precious metals followed the general trend, as gold and silver declined further into $1,714/oz and $18.48/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 14.07.2022 as of 17:30
