June 08, 2012

Week In Review: QE3-Reliant Gold Sags, Corn Surges Above $6, Oil & Copper Hover Near Lows

Details

We examine the latest developments in commodity markets and the week’s performance.

Most commodities treaded water this week after selling off sharply during May. However, the grain complex outperformed on weather-related supply concerns.

Stocks outperformed; the S&P 500 jumped 3.3 percent.

Macroeconomic Highlights

The major focus of markets continues to be Europe, but uncertainty will reign until the Greek parliamentary elections on June 17.

Bracing for the worst, sources say that Spain may request aid to help support its troubled banking system as early as this weekend. Spiking interest rates on Spanish debt have made it prohibitively expensive for the government to borrow from the market. The yield on the 10-year bond was last trading near 6.22 percent.

In the U.S., traders were disappointed after Ben Bernanke's testimony to Congress on Thursday failed to hint at any forthcoming stimulus. The Fed chairman said that the crisis in Europe posed a threat to the U.S. economy and that "as always, the Fed remains prepared to take action as needed to protect the financial system and economy in the event that financial stresses escalate."

The pledge was interpreted as generic and it signals that the central bank is unlikely to take any new actions at its next meeting on June 20.

Finally, China surprised markets on Thursday with an interest rate cut. The People's Bank of China reduced its benchmark one-year lending rate from 6.56 percent to 6.31 percent, its first reduction since December 2008. The move may help shore up China's economy, which is expected to have grown at its slowest pace in three years in the second quarter.

A host of data from China is set to be released this weekend and may give insight into the outlook for the country’s economy. Industrial production, retail sales, import, export and consumer price figures are on tap.

Commodity Wrap