COPPER TECHS: (Z5) Flag Highlights Bear Threat

Previous bid-to-cover ratio: most recent first: 1.98x*, 1.21x, 2.13x**, 1.64x**..

* This operation had a size of GBP550mln

** These operations had a size of GBP650mln.

The Industrial Product Price Index for June exceeded expectations in growing 0.4% M/M vs 0.1% expected, after -0.5% in May. Meanwhile the Raw Materials index jumped 2.7% M/M, (0.0% expected, -0.7% prior rev down from -0.4%). 

• After being unusually weak on a non-seasonally-adjusted basis in March and April (deflating M/M in both months - it hadn't been negative in either since 2016), June saw an unusual pickup (0.3%, just the 2nd rise in the last 7 years). For raw materials it was a similar story but vs unusually soft March-April data.
• This saw both IPPI and raw materials prices ticking up Y/Y - IPPI ex-energy/petroleum prices for the picking up again for the first time since November 2024 (3.0% from 2.6%), with raw materials printing positive Y/Y for the first time since March (1.1% after -3.2%).
• But the broader inflationary impact is less clear. The Y/Y rise was driven by a 34% rise in gold, silver, and platinum group metal ores and concentrates, which looks unrelated to consumer goods and more with safe haven/bullion trade (non-ferrous metal products rose 2.8% M/M).
• As the difference with ex-energy/petroleum products suggests, energy prices weighed heavily: conventional crude oil (-16%) and synthetic crude oil (-15%).
• A reminder that IPPI reflects factory gate prices: per StatCan: "Although the IPPI does not measure the direct effect of tariffs on prices, tariffs may indirectly influence prices measured in the IPPI. "
• However the Raw Materials index also includes "net taxes paid, and customs duties and tariffs paid on imported raw materials." The latter may reflect downside pressure from the ending of the carbon tax on April 1, offset by upside prices on retaliatory import tariffs. With so many countervailing factors it's hard to capture the signal from the noise for overall inflation pressures.
• The broad indices continue to trend higher, but the new highs are only being set ex-energy.

A reminder that the long end outperformance comes despite the impending long end APF sale from the BoE.