Treasury Yields Hit 2007 Highs, Pressuring Aluminium Prices
US 30-year Treasury yields reached 5.399 percent, a level not seen since 2007. This surge in borrowing costs weighed on metals markets, capping gains for aluminium despite tight physical inventories.
The 30-year US Treasury yield climbed to 5.399 percent on Tuesday. This marks the highest level recorded since 2007. The 10-year yield also rose to 5.041 percent. These figures reflect intensifying pressure on the bond market. Higher yields increase the cost of capital for industrial assets. This macro environment dampened sentiment in commodity trading.
Aluminium prices struggled against this backdrop. The LME 3-month contract settled at USD 3,249 per tonne. This represented a decline of 0.11 percent. The SHFE 2610 contract closed at RMB 24,150 per tonne. That was an increase of 0.46 percent from the previous settlement. Technical indicators show weak bullish momentum. Both markets remain in a consolidation phase.
Bond Market Volatility Dominates
Traders are pricing in a significant probability of further tightening. The CME FedWatch Tool indicates over 90 percent odds of a rate hike in September. This hawkish outlook drives yields higher. The 20-year yield reached 5.441 percent. This is the highest level since the note resumed issuance in 2020. Rising yields typically correlate with lower demand for non-yielding assets like metals.
Aluminium Inventories Remain Tight
Physical supply conditions remain constrained despite the price pressure. LME inventories stood at 245,000 tonnes last week. This is an extremely low historical level. In China, social inventory for aluminium ingots fell to 776,000 tonnes. This represents a weekly decrease of 26,000 tonnes. Destocking continues in major consumption areas. Geopolitical risks in the Strait of Hormuz add to supply concerns.
Producer activity is also influencing the market. Resumptions of aluminium production outside China are ramping up. This suggests a potential loosening of supply in the long term. However, immediate liquidity remains tight. Oil price surges are pushing up production costs. These factors create a complex pricing environment. The interplay between tight stocks and high yields defines current volatility.
Chinese Real Estate Trends
Domestic demand in China is shifting toward existing housing. Second-hand home transactions reached 549 million square meters from January to August. This volume grew by 10.6 percent year-on-year. New home sales area fell by 12.1 percent to 499 million square meters. Second-hand transactions have outpaced new sales for several months. The inventory of unsold commodity housing dropped by 0.5 percent. This is the first decline since September 2021.
These data points signal a transition in the property sector. The focus is moving from new construction to stock circulation. This shift may moderate the pace of new material consumption. However, the overall activity in the sector remains significant. Traders are monitoring these metrics for broader macroeconomic signals. The source GN auto markets/bonds: treasury yields highlights these cross-asset correlations.
