Copper futures have experienced a noteworthy trajectory, influenced by various market factors. The
bottoming of 30-year bonds in late October, resulting in lower yields, has coincided with a rally in copper
prices. Interest rates play a pivotal role, acting as a major headwind to construction spending and
financed projects, thereby augmenting demand for copper.
A significant driver for the copper market has been China’s industrial production figures for October,
surpassing expectations with a 4.6% increase compared to the anticipated 4.4%. This positive data has
added conviction to the strength of the copper market. Traders are eagerly anticipating the release of
the next Chinese Industrial Production numbers on December 14th for further insights.
The upcoming week presents challenges for risk assets, and the interest rate environment, as various
job-related data such as ADP Nonfarm, Avg Hourly Earnings, Unit Labor Costs, and the Unemployment
rate are scheduled for release. The evolving credit cycle poses potential benefits for commodities, with
copper serving as an indicator for the economic landscape.
To witness sustained strength in copper, market participants are keenly watching for a break and close
above the critical level of 3.92 3.96. Should we gain traction above this level, the psychologically
significant 4.00 level looms as the next significant hurdle. The intricacies of copper futures reflect the
intricate dance between economic indicators, global production figures, and the evolving credit cycle,
and will continue to be a closely watched commodity in the new year.
Chris Chavez, Market Strategist