The Bloomberg Commodity index has been on the rise, trading up 1.6% for the week and 6.8% year-to-date. This surge has been led by a 2.5% weekly gain in precious metals, with silver shooting back above USD 30. Industrial metals have also seen a 2.9% gain, particularly with copper jumping 6.2% after a recent correction. This momentum buying has been partly attributed to optimism over additional China stimulus expected to be introduced at the Third Plenum meeting in mid-July. However, concerns remain about copper’s ability to continue moving higher as the futures curve structure indicates ample supply and exchange-monitored stocks are on the rise, reaching a four-year high this past week.
On the other hand, gold and silver are looking to an early rate cut for support. Friday’s US job report has provided added price support, as bond yields fell following downward revisions in prior payrolls and a rise in the unemployment rate to 4.1%. These factors have kept the possibility of a September rate cut alive, benefitting the precious metals market.
Meanwhile, container freight rates are on the rise once again. The surge in global container freight rates continues as ships take longer routes to bypass the volatile Red Sea region and port congestions increase. This logistic nightmare has resulted in empty containers piling up in harbors around the world, creating a shortfall in China where they are needed. Companies have been pulling forward peak-season demand by ordering early, contributing to the surge in volume that is currently overwhelming the system. The Drewry Global Composite has risen for the past ten weeks, with last week’s 10% increase driving the year-over-year rise to a staggering 300%, putting upward pressure on goods worldwide.
