• Higher oil prices are adding to inflationary concerns...
  • ...US 10-year treasuries yields rise to levels not seen since July
Base metals
Three-month base metals prices on the LME were mainly weaker this morning, with the exception of copper ($9,383 per tonne), with the rest down by an average of 0.7%, led by a 1.6% fall in tin to $36,140 per tonne.

The most-active base metals contracts on the SHFE, meanwhile, were mixed, with the October contracts for aluminium, nickel and tin down by 1.4%, 0.8% and 0.1% respectively, while the October contracts for zinc, lead and copper were up by 0.7%, 0.9% and 0.7% respectively, with the latter at 69,310 yuan ($10,727) per tonne.

Precious metals
Spot gold prices were up by 0.4% at $1,764.99 per oz, while the more industrial precious metals saw gains averaging 1.2%.

Wider markets
The yield on US 10-year treasuries started to climb toward the end of last week following the US Federal Open Market Committee (FOMC) meeting and has held on to those gains. It was recently at 1.46%, having been rangebound around the 1.3% level previously.

Asia-Pacific equities were mainly firmer on Monday morning: the Nikkei (-0.03%) the Hang Seng (+0.39%), the CSI 300 (+0.64%), the ASX 200 (+0.57%) and the Kospi (+0.27%).

Currencies
The US Dollar Index was consolidating on Monday morning and was recently at 93.28 - compared with 93.20 at a similar time on Friday.

Most of the other major currencies were also consolidating: sterling (1.3687), the euro (1.1712) and the Australian dollar (0.7280), but the Japanese yen (110.62) was weaker.

Key data
Data already out on Monday, showed Japan’s services producer prices climbed 1% in August, after a 1.1% rise in July.

Later on Monday, there will data on EU M3 money supply and private loans, along with US data on durable goods.

In addition, there is a German Bundesbank monthly report and a barrage of central banker speeches from the likes of European Central Bank president Christine Lagarde, Bank of England governor Andrew Bailey and FOMC members Charles Evans, John Williams and Lael Brainard.

Monday’s key themes and views
Most of the metals are either consolidating near high ground, or rebounding after recent weakness, but lead and nickel are the two struggling the most. The fact that central bankers are looking to start tightening monetary policy suggests they feel the economies are strong enough and that may well boost the reflation trade again, but higher rates may become a headwind for corporate earnings and that could have a negative impact on equities. And weaker equities, in turn, could weigh on metal prices for a while. Overall, we continue to see the path of least resistance remaining sideways-to-up, but will keep a close eye broader markets.

Gold prices have edged higher despite the stronger treasury yields, which suggests that, having sold-off in recent weeks, investors now see value again. And firmer fuel prices will also add to inflation concerns.