PRECIOUS METALS: Silver - Looking To Accelerate Higher, Lease Rates Spike
The range overnight for XAG was $40.9698 - $41.2882, Asia is currently trading around $41.1100, -0.15%. Silver continues to build on its break back above $40.00. Dips should now continue to be supported as the precious metal attempts to gain the momentum to have a look back towards the highs around $50.00.
- The Kobeissi Letter on X: “Investors are scrambling for silver: Silver lease rates, the one-year borrowing cost of silver in the UK, is above 5% for the 5th time this year. This is well above historical levels of near-zero rates, signaling supply shortages.”
- “Additionally, the price gap between New York silver futures and London spot prices widened to $1.20 per ounce. Meanwhile, Comex warehouse silver inventories are now at their highest level since records began in 1992. Demand for silver is historically high.”
- “ANZ RAISES YEAR-END SILVER TARGET TO $44.70/OZ AS RALLY BUILDS” - BBG
Fig 1 : Silver Lease Rates
Source: MNI - Market News/@KobeissiLetter/Bloomberg
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STIR: RBA Dated OIS Slightly Firmer Ahead Of Today’s RBA Decision
At the time of writing, RBA-dated OIS pricing is slightly firmer on the day across meetings ahead of today’s RBA Policy Decision.
- A 25bp rate cut this week is given a 97% probability, with a cumulative 59bps of easing priced by year-end (based on an effective cash rate of 3.84%).
Figure 1: RBA-Dated OIS – Current Vs. Yesterday
Source: Bloomberg Finance LP / MNI
JGBS: Treading Water Ahead Of Today's US CPI
At the Tokyo lunch break, JGB futures are weaker but off lows, -8 compared to the settlement levels.
- Cash US tsys are little changed in today's Asia-Pac session ahead of today's US CPI data.
- (Bloomberg) "Markets remain skeptical that the Bank of Japan will raise rates soon, even as inflation proves sticky. Economists pencil in one hike by year-end, but with the GDP deflator likely to exceed 3%, homegrown inflation is showing signs of entrenchment, adding to the urgency to tighten policy."
- Cash JGBs are showing a modest sell-off across benchmarks, led by the 4-year. The benchmark 10-year yield is 0.4bp higher at 1.495% versus the cycle high of 1.616%.
- Swap rates are little changed. Swap spreads are mixed.
CHINA PRESS: China Stock Market Hit New High This Year
The benchmark Shanghai Composite Index hit a new high this year, reaching an intra-day peak of 3,650 on Monday, China Securities Journal reported. The turnover in the A-share market exceeded CNY1.8 trillion, with over 4,100 stocks rising and over 80 of them hit the day limit, the newspaper said.
