Core Viewpoint - The market's expectations for the Federal Reserve to cut interest rates are diminishing due to rising energy prices and inflation concerns, with a global trend of interest rate hikes likely accelerating [1][2]. Group 1: Federal Reserve and Interest Rate Expectations - Traders have abandoned expectations for the Federal Reserve to ease monetary policy in the near term, shifting focus to a potential rate cut only in December [2]. - The FedWatch tool indicates that prior to the recent Middle East conflict, there was a strong belief in multiple rate cuts, but this has now changed significantly [1][3]. - The probability of a 25 basis point cut in June has been replaced by a more cautious outlook, with traders now expecting only a 17 basis point cut for the year [3]. Group 2: Global Bond Market Reactions - The global bond market has nearly reversed all gains made earlier in the year, with significant increases in bond yields across various countries, including the U.S., U.K., Germany, Australia, and Japan [5]. - The Bloomberg Global Aggregate Bond Index, which tracks total returns on investment-grade government and corporate bonds, is now flat compared to the beginning of the year, reflecting the impact of geopolitical tensions on market sentiment [5]. - U.S. Treasury yields have reached multi-month highs, with the 10-year yield rising to 4.255%, indicating that investors are factoring in the risks associated with escalating conflicts [7]. Group 3: Central Bank Policy Outlook - The geopolitical situation and rising oil prices are influencing central banks' monetary policy decisions, with a focus on how these factors will affect interest rates globally [7]. - Market expectations indicate that other central banks, unlike the Fed, are likely to pursue rate hikes, with projections for the Bank of England, European Central Bank, and Bank of Canada to raise rates by approximately 10, 40, and 30 basis points respectively [7].

1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - The weakening expectation of the Fed's interest rate cut and the increase in inventory are putting pressure on copper prices, but the long - term fundamentals remain positive, which is expected to support the relatively low prices. [5] - In the short term, the domestic spot drive is weakening, while the overseas spot logic remains strong. The overall inventory of global copper has increased this week, with a significant increase in social inventory. [5] - In the long term, the fundamentals still support copper prices. The lack of new large - scale copper mine projects globally in 2026 and the high interference rate in copper mine production will limit the overall supply growth rate of copper mines, thus restricting the growth of refined copper production. The long - term consumption recovery expectation is still strong, and emerging industries such as AI computing power centers have a solid consumption logic. [5] - In terms of trading strategies, the short - term increase in inventory puts pressure on prices, but when prices fall to a relatively low range, the enthusiasm of downstream buyers is still high. Based on the long - term positive fundamentals, the idea of buying copper on dips remains unchanged. Given the high volatility of copper prices, option strategies can be considered to hedge risks. In terms of spread trading, the profit margin for spot exports has expanded, and attention can be paid to the opportunity of internal - external reverse arbitrage. [5] 3. Summary According to Relevant Catalogs Trading End - Volatility: The volatility of LME, SHFE, and COMEX copper has expanded. The LME copper price volatility is around 20%, and the SHFE copper volatility has reached about 25%, slightly rising compared with the previous week. [9] - Term Spread: The term structure of SHFE copper is weak, and the LME copper spot premium has expanded. The SHFE 02 - 03 spread on January 16 was - 180 yuan/ton, lower than - 170 yuan/ton on January 9. The LME 0 - 3 premium on January 16 was 61.52 US dollars/ton, higher than 41.94 US dollars/ton on January 9. The COMEX copper near - end C structure is relatively large, and the spread between the January 16th 01 and 02 contracts was - 66.14 US dollars/ton, slightly narrowing compared with - 68.34 US dollars/ton on January 9. [16] - Position: The positions of SHFE, INE, and LME copper have decreased, while the position of COMEX copper has increased. The SHFE copper position has decreased by 38,000 lots to 643,600 lots. [17] - Capital and Industry Positions: The net short position of LME commercial enterprises has decreased. The net short position of LME commercial enterprises decreased from 72,600 lots on January 2 to 67,500 lots on January 9; the net long position of CFTC non - commercial enterprises decreased from 57,900 lots on January 6 to 53,400 lots on January 13. [23] - Spot Premium: The domestic copper spot discount has expanded, and the Yangshan Port copper premium has declined. The domestic copper spot discount expanded from a discount of 45 yuan/ton on January 9 to a discount of 125 yuan/ton on January 16. The Yangshan Port copper premium declined from 51 US dollars/ton on December 31 to 32 US dollars/ton on January 9. The US copper premium has marginally declined. The Rotterdam copper premium remained at 200 US dollars/ton on January 16, and the Southeast Asian copper premium decreased from 187.5 US dollars/ton on January 9 to 145 US dollars/ton on January 16. [29] - Inventory: The global total inventory has increased, with a significant increase in domestic social inventory. The global total copper inventory increased from 950,300 tons on January 8 to 1,020,600 tons on January 15. The domestic social inventory increased from 273,800 tons on January 8 to 320,900 tons on January 15, reaching a high level in the same period of history. The bonded area inventory increased from 78,800 tons on January 8 to 80,000 tons on January 15. The COMEX inventory increased from 518,000 short tons on January 9 to 542,900 short tons on January 16, reaching a high level in the same period of history. The LME copper inventory increased from 139,000 tons on January 9 to 143,600 tons on January 16. [33] - Position - to - Inventory Ratio: The position - to - inventory ratio of LME copper fluctuates, and the position - to - inventory ratio of SHFE copper is at a low level in the same period of history. The position - to - inventory ratio of the SHFE 02 contract has declined and is at a low level in the same period of history. The position - to - inventory ratio of LME copper fluctuates, indicating that the overseas spot lacks a driving logic. [34] Supply End - Copper Concentrate: Imports have increased year - on - year, and processing fees have continued to be weak. In November 2025, China's imports of copper ore and concentrates were 2.5262 million tons, a month - on - month increase of 3.05% and a year - on - year increase of 12.55%. The port inventory of copper concentrates increased from 428,000 tons on January 9 to 547,000 tons on January 16. The copper concentrate processing fee has continued to be weak, and the smelting loss decreased from 2,016 yuan/ton on January 9 to 2,118 yuan/ton on January 16. [40] - Recycled Copper: Imports have increased year - on - year, and domestic production has increased significantly year - on - year. In November, recycled copper imports were 208,100 tons, a year - on - year increase of 19.94%. In September, the domestic recycled copper production was 97,700 tons, a year - on - year increase of 17.85%. The refined - scrap spread of recycled copper has narrowed but is still higher than the break - even point, and the import profit of recycled copper has turned into a loss. [41][46] - Blister Copper: Imports have increased month - on - month, and processing fees have rebounded. In November, blister copper imports were 58,300 tons, a month - on - month increase of 5.60%. In December, the blister copper processing fee rebounded, with the southern processing fee at 1,500 yuan/ton and the import processing fee at 95 US dollars/ton. [49] - Refined Copper: Production has increased year - on - year, imports have decreased, and the loss of copper spot imports has expanded. In December, the domestic refined copper production was 1.1781 million tons, a year - on - year increase of 7.54%. The cumulative production from January to December was 13.4326 million tons, a year - on - year increase of 11.38%. In November, refined copper imports were 271,100 tons, a year - on - year decrease of 24.67%. In December, China's imports of unwrought copper and copper products were 437,400 tons, a year - on - year decrease of 21.89%. The loss of copper spot imports expanded from 981.04 yuan/ton on January 9 to 1,226.58 yuan/ton on January 16. [52] Demand End - Capacity Utilization Rate: In December, the capacity utilization rate of copper product enterprises rebounded month - on - month. In December, the capacity utilization rates of copper tubes and copper strips and foils rebounded but were at a low level in the same period of history. In the week of January 15, the capacity utilization rate of wire and cable decreased marginally. [56] - Profit: The copper rod processing fee is at a low level in the same period of history, and the copper tube processing fee has declined. As of January 16, the processing fee for copper rods used in the power industry in East China was 280 yuan/ton, lower than 410 yuan/ton on January 9. On January 16, the 10 - day moving average of the processing fee for R410A special copper tubes was 5,226 yuan/ton, lower than 5,368 yuan/ton on January 9. The processing fees for copper strips and lithium - ion copper foils remained stable at a low level. [61] - Raw Material Inventory: The raw material inventory of wire and cable enterprises has remained at a low level. In December, the raw material inventory of copper rod enterprises was at a neutral - low position in the same period of history, and the raw material inventory of copper tubes was at a low level in the same period of history. The weekly raw material inventory of wire and cable has continued to decline. [62] - Finished Product Inventory: The finished product inventory of copper rods is at a high level, and the finished product inventory of wire and cable has decreased. In December, the finished product inventory of copper rods was at a high level in the same period of history, and the finished product inventory of copper tubes was at a neutral - low position in the same period of history. The weekly finished product inventory of wire and cable has decreased. [65] Consumption End - Apparent Consumption: The apparent consumption is good, and power grid investment remains an important support. From January to November, the cumulative actual consumption of domestic copper was 14.5615 million tons, a year - on - year increase of 6.14%. The cumulative apparent consumption from January to November was 14.6431 million tons, a year - on - year increase of 5.44%. Industries such as power grid investment, home appliances, and new energy are important supports for copper consumption. The growth rate of power grid investment has slowed down. From January to November, the cumulative power grid investment was 560.4 billion yuan, a year - on - year increase of 5.90%. [72] - Air - Conditioner and New - Energy Vehicle Production: In November, the domestic air - conditioner production was 10.577 million units, a year - on - year decrease of 35.70%. In December, the domestic new - energy vehicle production was 1.718 million units, a year - on - year increase of 12.29%. [73]

Group 1 - The A-share market experienced a significant drop, with the Shanghai Composite Index falling by 39 points, nearly 1% [1] - The decline was primarily influenced by the drop in large-cap tech stocks in the US, which negatively impacted A-share tech stocks that were already weak [1] - The market's expectations for a Federal Reserve rate cut in December have diminished, with the probability of a 25 basis point cut dropping from 70% to 50%, affecting investor sentiment [1] Group 2 - The negative impact of the Federal Reserve's rate cut expectations is likely to continue in the short term, leading to a challenging environment for non-USD economies to achieve significant upward movement [2] - The market is expected to exhibit a volatile trend rather than a clear upward breakout before the end of the year [2] - Investors are advised to either refrain from trading if they do not understand the market or cautiously increase positions if they are confident in their profitability [2] Group 3 - International gold prices experienced a sharp decline, with a maximum intraday drop of 3.8% and a closing drop of 2%, indicating a significant reversal of the previous three days' gains [4] - The decrease in gold prices is attributed to the reduced expectations for a Federal Reserve rate cut in December, which negatively impacts gold as a hedge against inflation [4] - The speculative nature of the recent rise in gold prices, driven by expectations of rate cuts, has weakened, suggesting further downward potential for gold prices [5]

Core Viewpoint - The London Metal Exchange (LME) copper futures declined due to hawkish comments from Federal Reserve officials, leading to widespread market sell-offs [1][5]. Group 1: Market Performance - On November 14, LME three-month copper fell by $104, or 0.95%, closing at $10,852.00 per ton [2]. - Other industrial metals also experienced declines, with three-month aluminum down by $38.00 (1.31%), zinc down by $34.50 (1.13%), lead down by $14.00 (0.67%), and tin down by $445.00 (1.20%) [2]. - Despite the recent drop, LME copper recorded an approximate 1.3% increase for the week, having briefly surpassed the $11,000 mark on Thursday [4]. Group 2: Economic Indicators - The sell-off was driven by reduced expectations for a Federal Reserve rate cut in December, as concerns about "overheating" inflation were expressed by Kansas City Fed President Esther George [5]. - The St. Louis Fed President James Bullard indicated that the current policy stance is closer to "neutral" rather than "mildly restrictive," suggesting limited room for further easing [5]. - The International Monetary Fund (IMF) noted signs of economic weakness in the U.S., with fourth-quarter GDP growth expected to fall below the previously predicted 1.9% due to government shutdown impacts [5]. Group 3: Production Data - In October 2025, China's primary aluminum production was reported at 3.8 million tons, a year-on-year increase of 0.4%, with cumulative production from January to October reaching 37.75 million tons, up 2.0% [5]. - Additionally, China's production of ten non-ferrous metals in October 2025 was 6.95 million tons, reflecting a year-on-year growth of 2.9%, with cumulative production for the first ten months at 68.14 million tons, an increase of 3.1% [5].

Core Insights - Global market risk appetite is increasing, and expectations for a Federal Reserve interest rate cut are diminishing [1] - Notable institutions have lowered their gold price targets, indicating a significant decline in demand for the second quarter [1] Group 1 - The rise in global market risk appetite suggests a shift in investor sentiment towards riskier assets [1] - The reduction in expectations for a Federal Reserve rate cut may impact investment strategies across various sectors [1] Group 2 - The adjustment of gold price targets by major institutions reflects a bearish outlook on gold demand [1] - The anticipated significant decline in demand for gold in the second quarter could lead to price volatility in the commodities market [1]