• The US Dollar Index, recently at 91.16, was consolidating off last week’s low of 90.42

Base metals
The rallies in the LME base metals were looking robust this morning with copper, aluminium, zinc and tin, near recent highs, while the two laggards of recent months, nickel ($17,730 per tonne) and lead ($2,155 per tonne), were racing back toward high ground.

On the surface this suggests all the metals were trading a macro picture and not their own fundamentals, but aluminium is being driven by concerns that output in China might be constrained while the country strives to reduce pollution and tin is up on the back of the latest production disruptions at Malaysia Smelting Corp.

Precious metals
The precious metals were up across the board, led by a 3.4% rise in spot silver ($26.76 per oz), with platinum ($1,234.50 per oz up by 3.1%, palladium ($2,980.20 per oz) up by 1.4% and gold up by 1% at $1,786.68 per oz.

Wider markets
The yield on US 10-year treasuries was recently quoted at 1.61%, this after 1.64% at a similar time on Friday.

The Asian-Pacific equities that were open were mainly firmer on Tuesday: the ASX 200 (+0.45%), the CSI 300 (closed), the Nikkei (closed), the Hang Seng (+0.52%) and the Kospi (+0.63%)

The US Dollar Index’s downward trend halted on April 29, with the index since getting some lift. At 91.16 it is now near the middle of this year’s 89.21-93.44 range.

With the dollar off its lows, the other major currencies were generally consolidating: the euro (1.2036), sterling (1.3879) and the Australian dollar (0.7744), while the yen (109.33) was weaker.

Key data
Key economic data out on Tuesday includes the United Kingdom’s manufacturing purchasing managers’ index (PMI), M4 money supply, mortgage approvals and net lending to individuals.

US data includes the trade balance, factory orders, and the Investor's Business Daily (IBD), TechnoMetrica Institute of Policy and Politics (TIPP) economic optimism index.

Today’s key themes and views
The recent show of strength in the LME base metals continues and our view remains the same; we see the path of least resistance remaining to the upside, but at these levels a correction can never be ruled out. We expect the catalyst for that would be a correction in the equity markets, but the market does not seem to have the appetite for that given all the stimulus and steady reopening up of economies from lockdowns.

The rising tide in the base metals and oil seems to be lifting the precious metals too, with palladium leading the way. Given all the stimulus and how the expected infrastructure spending could boost commodity prices, it is not surprising inflation expectations are on the rise.