Yields – USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Key drivers for 2020 remain likely to be the same ones as for 2019:   outlook for growth in developing economies and sustained health of advanced ones, set against potential supply disruptions and other geopolitical risks.   However overlying these factors, the coronavirus – covid-19 outbreak which has created a whole new level of uncertainty. 
  • From a marketplace perspective the coronavirus – CoVid-19, situation is remains very fluid regarding the economic impact on major world economies.  While recent reports have Chinese spread of infection slowing, infection rates are accelerating in the rest of the world.   [‘coronavirus’ is the virus.  ‘CoVid-19’ is the name of the disease]
  • Chinese industry (steel and mineral sands) appear to be going back to work, albeit with some quarantine issues, and ramping up, which is likely to still take another couple of months to return to capacity, according to direct anecdotes from industry participants.  
  • Base metal markets remain fundamentally tight, despite slowing growth outlook for the first half of 2020.  
    • However global focus on the outlook for growth is weakening in the face of wider spread coronavirus infections about the globe. 
    • Most prices fell this week (on new USA fears).  
    • Base metal prices were relatively unaffected this week, but precious metals jumped and oil fell.  
    • Watch for supply disruption(s).  In 2020 there are numerous key labour negotiations at operations in Chile.  Supply disruptions such as these, in absence of dramatic (geopolitical) drivers are likely to drive price responses. 
  • USA’s.  preparedness for a coronavirus outbreak appears poor.  
    • e.g. the Administration had a goal of producing a million masks this week, but has produced 77,000.  The USA Border Protection screening process (as reported recently)  involves passengers passing through to put the palms of their hands on a glass screen for ID without any cleaning of the screen between passengers.  This seems an ideal way for incoming passengers to spread any infection.  
  • At this stage the USA’s economy appears a bit weak: 
    • The PMI outlook for March has only 3/10 segments with improving outlook; there is negative year-on-year growth in:  Industrial Production, Durable goods and Vehicles, Capacity Utilisation (apart from Oil & Gas and Mining) is low.  
    • however positive year-on-year growth was reported recently for Housing Starts and Construction spending.  
  • nb: most of these data were recorded prior to this week’s USA alarm at the prospect for a domestic outbreak of coronavirus infections.  The USA does not look like a robust patient. 


  • *Copper  Fitch forecasts higher Cu prices for (latter HY) 2020.  Expects deficit beyond 2020. 
  • Cobalt  GM plans to use less Co in its new EV batteries, displacing some Co with Al.   
  • *Nickel  Australia to grow Ni output vs a global production slowdown.
  • *Zinc & Lead  Coronavirus fears are aggravating near term oversupply.  Long term, shortage is expected. 
  • Tin  Producer discipline is called for.  Looking at PT Timah for a response.    
  • Aluminium  Rusal forecasts Al demand to grow in 2020, notes coronavirus as a risk.
  • Gold  USA equities down, USD down, USA bond yields down, gold price up.  
  • Platinum & Palladium  Auto industry demand for Pt to rise in 2020, though likely market will remain in surplus.
  • *Oil  OPEC+ failed to agree on reductions.  USA producers likely to respond on cash cost vs price. 
  • *Coal  Coking coal price agreements for Mar20Qtr for HCC & SSCC.  Shipments post-USA-China phase1.
  • Iron Ore  Prices increased as Vale close a 11 Mtpa project, and China’s outlook improved.  
  • Shipping  Asian region freight rates were stable through last week.  


  • *USA Treasury Yield Curves:  returned to ‘normal’, but margins between USA & Aust much smaller.
  • Baker Hughes Rig Counts:  Counts basically steady though expect changes after this week. 
  • *USA – Purchasing Managers’ Index:  slower growth outlook across most segments for March.
  • *USA – Construction Spending:  positive growth in both private and residential spending