• United States 10-year treasuries yields have eased to 1.59%, from 1.64%
  • Wall Street equity indices set fresh record highs on Monday

Base metals

Three-month base metals prices on the LME were more negative than positive this morning, with copper ($9,123 per tonne) the only metal in positive territory, with a 0.1% gain. The rest were down by an average of 0.4%, led by a 0.6% fall in zinc ($2,840 per tonne).

Prices on the SHFE were more mixed with April lead and May tin down by 0.5% and 0.8% respectively and May copper off by 30 yuan per tonne at 67,480 yuan ($10,375) per tonne. The rest were up by an average of 0.5%, although that was skewed by a 1.1% gain in May aluminium.

Precious metals
Precious metals were mainly firmer this morning, led by a 1.2% gain in spot platinum ($1,223.10 per oz), while silver was unchanged at ($26.21 per oz) and gold ($1,734.35 per oz) and palladium ($2,394.50 per oz) were up by 0.2% and 0.4% respectively.

Wider markets
The yield on US 10-year treasuries has eased back to the 1.59%, from 1.64% level at a similar time on Monday, perhaps the market is adjusting/consolidation ahead of Wednesday’s US Federal Open Market Committee (FOMC) announcements and press conference.

Asian-Pacific equities were stronger while they followed Wall Street gains on Monday: the ASX 200 (+0.80%), the Nikkei (+0.52%), the CSI 300 (+0.59%), the Kospi (+0.70%) and the Hang Seng (+0.33%).


The US Dollar Index is firm this morning and was recently at 91.84, around the level where it was at a similar time on Monday.

The other major currencies remained on a back foot: the euro (1.1928), the Australian dollar (0.7745), sterling (1.3858) and the yen (109.17).

Key data
Key data already out on Tuesday showed a slightly stronger revised industrial production number in Japan that climbed by 4.3% month on month in January, from an initial reading of 4.2%.

Later there is data on French consumer prices, European Union and German ZEW economic sentiment readings, with US data on retail sales, import prices, industrial production, capacity utilization, business inventories and the housing market index from the National Association of Home Builders.

Today’s key themes and views
The base metals seem to be consolidating after recent pullbacks. Most of the metals have either held up well, or have recovered well from the early March weakness, the exceptions are nickel and lead that sold off considerably and prices have held down.

The underlying themes with economic recovery, stimulus spending and constrained supply chains should all be bullish for commodity prices, but there are potential tripwires. First, how much of the bullishness has already been baked in to the prices. Second if broader markets get jittery, a correction in bonds and equities would likely flow into the metals, at least initially. As such, we would be wary around key events like Wednesday’s FOMC meeting and what the markets take away from that is.

Gold prices found some support below $1,700 per oz, if the broader market does become more nervous about inflation and higher bond yields spook equity markets, then these weaker gold prices may offer a cheap safe-haven for first movers.