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February 5th - Ahead of the Bank of Englands interest rate decision, the yield on 2-year UK government bonds edged lower. The market expects the Bank of England to keep interest rates unchanged at 3.75%. Investors will be watching for any signals from the central bank indicating a possible rate cut in the coming months. Tradeweb data shows that the yield on 2-year UK government bonds fell 2 basis points to 3.708%.On February 5th, Ministry of Commerce spokesperson He Yadong stated that in recent years, under the strategic guidance of the two heads of state, political mutual trust between China and Uruguay has deepened, and cooperation in various fields has steadily progressed. China has remained Uruguays largest trading partner for over a decade. China will work with Uruguay to implement the important consensus reached by the two heads of state, make good use of mechanisms such as the Bilateral Joint Commission on Economic and Trade Cooperation, and promote the improvement, efficiency, and deepening of China-Uruguay economic and trade cooperation. At the Ministry of Commerces regular press conference that day, a reporter asked: Uruguayan President Orsi visited China, leading a large business delegation composed of entrepreneurs. What important progress has been made in economic and trade relations? He Yadong explained that during the visit, the two heads of state held talks, pointing the way for the development of bilateral economic and trade relations. Under the joint witness of the two heads of state, the Chinese Ministry of Commerce and the Uruguayan Ministry of Foreign Affairs signed a Memorandum of Understanding on Deepening Cooperation in Facilitating Bilateral Trade, confirming that they will strengthen cooperation in areas such as supply chains, standards and conformity assessment, trade facilitation and digitalization, and green trade, and promote high-quality development of bilateral trade.According to CNN: U.S. Senator Warren has launched an investigation into the auto loan industry.February 5th – On February 4th, Wan Jinsong, Vice Minister of the National Energy Administration of China, met with Petrobras President Ceboré in Beijing. The two sides held in-depth exchanges on cooperation in oil and gas, renewable energy, and energy transition. Wan Jinsong stated that under the strategic guidance of the two heads of state, practical cooperation between China and Brazil in the energy sector has continued to deepen, achieving a series of positive results. Petrobras is an important partner of Chinese enterprises, and he hoped that both sides would uphold the principle of mutual benefit and win-win cooperation, continue to strengthen exchanges, consolidate and expand cooperation, and jointly promote the economic and social development of both countries, benefiting the people of both nations. Ceboré stated that Brazil highly values its cooperation with Chinese partners and hopes to further expand cooperation with Chinese enterprises in various fields such as oil and gas, renewable energy, technology and equipment, investment, and engineering services.February 5th - Michael Pfister of Commerzbank stated in a report that if the Bank of England keeps interest rates unchanged in its policy decision but simultaneously raises market expectations for future rate cuts, the pound could face further declines. The market anticipates a 7-2 vote from the Bank of England to hold rates steady. Pfister said, "If the vote is more divided than expected, the market is likely to bet on a rate cut in advance, which would weaken the pound." The Bank of England will also release its first economic forecasts since the UK budget in November last year. Pfister indicated that these forecasts could pave the way for larger rate cuts.

Copper price snaps four-day rally despite China's increased metal imports in August

Alina Haynes

Sep 07, 2022 16:38

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Intraday, the price of copper falls almost 1.5%, representing the greatest day decline of the week as of early Wednesday morning in Europe. In doing so, the red metal breaks the previous three-day recovery from the six-week low.

 

Reuters reported that three-month copper prices on the London Metal Exchange (LME) completed the month of August at $7,801.50 per tonne, up 8.5% from a 20-month low reached on July 15 but still down 19.7% from the beginning of the year.

 

Fears of economic slowdown in the world's largest client, China, as well as the rest of the world, receive considerable attention as the causes are investigated. Increasing market wagers over the Fed's assertiveness are also placing a downward impact on metal prices. In contrast, an increase in China's copper imports should have supported metal prices, but it did not.

 

"According to customs statistics released on Wednesday, China imported 26% more copper in August than a year earlier, as lower prices and stockpiles prompted by power rationing increased demand for foreign supply," said Reuters. In August, China imported a total of 498,188.60 tonnes of unwrought copper and copper products, which included anode, refined, alloy, and semi-finished copper products. Compared to the previous year's amount of 394,017.10 tonnes, this is a two-year low.

 

It should be emphasized that copper buyers are not pleased with the drop in warehouse supplies. Reuters reported that Shanghai Futures Exchange copper warehouse stocks fell to a seven-month low of 31,205 tonnes on August 19.

 

On a separate page, US Treasury rates surge to a new multi-day high, propelling the US Dollar Index (DXY) closer reclaiming the two-decade high. This combines with hawkish Fed forecasts to impact on market sentiment and push the USD/JPY to its highest level in 24 years and the USD/CNH near the critical 7,000 milestone.

 

The US ISM Services PMI increased to 56.9, compared to the market's forecast of 55.1 and the prior reading of 56.7. However, the S&P Global Composite PMI and Services PMI decreased to 44.6 and 43.7, respectively, from early projections of 45.0 and 44.1, respectively. Despite this, the US Dollar Index (DXY) increased upon the announcement and reestablished a 20-year high. The CME's FedWatch Tool indicates a 72.0% chance of a 50 basis point (bps) Fed rate hike in September, up from 57.0% one day ago.

 

Consequently, commodities continue to decline, while US stock futures and Asia-Pacific stocks report losses at the latest.

 

The monthly releases of the US trade balance and Fed Beige Book reports could provide commodity traders with entertainment. However, the next two days will be dominated by the numerous Fed speakers, including Fed Chairman Jerome Powell, who are slated to make public appearances.

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