Equity markets pushed higher as Nancy Pelosi landed in Taiwan; the trip has drawn criticism from China which is now expected to take ‘necessary measures to defend its sovereignty and will conduct military drills from August 4th. The dollar was marginally strong, with the index bouncing off the 50 DMA and testing 106. The U.S. 10 yr yield trades at 2.65% but the yield inversion deepens with the 2-10yr bonds at 35bps. Bond yields in Europe are consolidating with the spread between Italy and Germany less extreme at 3.016% and 0.775%, respectively. U.S. job openings edged lower in June to 10.698m as the labour market softens but remains near record highs. A promising sign of inflation slowing is that the WCI benchmark per 40ft box from Shanghai to L.A. has declined sharply on a Y/Y basis.
LME prices declined as the USD was marginally more substantial, and the market weighed the risks of Pelosi’s trip to Taiwan. Nickel lost the most ground as Indonesia’s suggested they are still studying the prospect of a ban or export tax on NPI and ferronickel, this caused nickel to test $22,100/t, but the market found support at this level. This would significantly impact Chinese prices and cause more investment into Indonesia for stainless production. Zinc prices were supported below $3,300/t and closed above this level at $3,312/t, and the cash to 3-month weakened marginally at $100/t. Tin was also weaker after failing above $24,600/t, with the spread at $188/t. Copper prices oscillated around the open today and are currently unchanged; the cash to 3-month spread tightened marginally into $8.50/t. Aluminium prices were bid at $2,405/t, and the market trades around $2,415.50/t.
Energy prices edged higher today as OPEC+ suggested Biden’s request for more oil will not be fulfilled. Water levels in the Rhine are very low, reducing the flow of barges. Brent trades at $101.05/bl and $94.79/bl.
All price data is from 02.08.2022 as of 17:00