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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
COMMODITIES
- Risk aversion has been surging since the beginning of June as geopolitical uncertainty and the deterioration in the macro outlook have been weighing on risky assets.
- Selling pressure on copper prices has been intense in the past few weeks, with the ‘risk on’ industrial metal down over 30% since its June high.
- We previously saws that leading economic and financial indicators have been pricing in lower copper prices for a while.
- For instance, the chart below shows that the China 10Y yield, which could be considered as an alternative barometer of the Chinese economic activity, has been pricing in much lower copper prices.
- We have seen lately that China ‘reopening’ narrative has been fading as the arrival of the BA5 coronavirus variant is threatening the country of renewed lockdowns (i.e. Shanghai), which will lead to further downward revision in growth expectations.
- 10Y Yield has been consolidating lower this week after rejecting its 200DMA; it is now trading back below the key 2.80% support.
- With recession risks surging globally (particularly in Europe), it is difficult to price a bottom on risky assets, therefore elevated volatility in markets could continue to weigh on ‘Dr. copper’.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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