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In This List

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Gold continues to surge as inverted US bond yield curve stokes recession fears

Gold continued its surge during the week ending Aug. 16 as falling London Metal Exchange copper prices contributed to mounting fears of a looming global recession, though some other base metals still held up.

Hong Kong Financial Secretary Paul Chan Mo-po warned Aug. 15 of a recession for the city upon releasing HK$19.1 billion of relief measures. About A$56 billion was wiped from the ASX the same day, according to The Australian, in its worst one-day fall since February 2018.

The ASX selloff appeared to stem from the U.S. government bond yield curve briefly inverting Aug. 14 when the 10-year yield dropped below that on the two-year Treasury note.

Price ring

LME copper dropped to US$5,708 per tonne Aug. 16 from US$5,745/t the preceding Friday as S&P Global Market Intelligence revised down its full-year average LME cash contract price forecast to US$5,976/t from US$6,176/t.

Though lead fell from US$2,085/t to US$2,048/t and tin fell from US$16,875/t to US$16,800/t, other base metals were buoyant, including aluminum, which was up to US$1,755/t from US$1,745.50/t, and zinc, which was up to US$2,263.50/t from US$2,262/t.

Nickel rallied from to 16,080/t from US$15,610/t after Indonesia's coordinating minister for maritime affairs, Luhut Pandjaitan, said the government would "expedite" a planned ban on nickel ore exports when asked if it will be implemented before 2022.

Gold rose to US$1,514.60 per ounce from US$1,497.70/oz, while silver went up to US$17.23/oz from US$16.94/oz.

The S&P Global Platts IODEX iron ore CFR North China price fell from US$94.80/t on Aug. 8 — the last price given that week due to the National Day of Singapore public holiday Aug. 9 — to US$89.55/t on Aug. 16.

Talking points

Morgan Creek Capital Management CEO Mark Yusko said in an Aug. 16 report that the key indicators, which he calls the "four horsemen of the growthpocalypse" — 10-year Treasury yields, Brent crude, LME copper prices and the Korea Composite Stock Price Index — are flashing red recession signals.

"Those four horsemen are all in full gallop downwards, which is usually a bad sign," Yusko said in an interview. "A lot of people are calling for a 2020 recession. [I] think that's a pretty good call."

ING Economics said the inverted yield curve, which has preceded all nine of the U.S. recessions since the mid-1950s, suggests investors are "seriously worried" about a downturn.

Oxford Economics senior U.S. economist Jake McRobie said the odds of a recession this year and in 2020 are about 15% and 40%, respectively, factoring in fiscal, monetary and trade policy risks.

Financings

Shandong Gold Mining Co. Ltd. plans to launch a short-term debt offering of up to 10 billion Chinese yuan to repay loans and for working capital, with the bonds' maturity to be set at no more than 270 days.

Codelco secured US$480 million in debt funding to help bankroll its planned US$40 billion overhaul of aging mines through 2026, Bloomberg News reported, citing an exchange filing.

Capricorn Metals Ltd is raising A$65 million in two tranches to fund the accelerated development of its preproduction-stage Karlawinda gold project in Western Australia.

Filo Mining Corp. entered into two agreements to raise an aggregate C$40 million to explore and develop its Filo del Sol copper-gold-silver project straddling the border between Chile and Argentina.

Platinum Group Metals Ltd. aims to secure US$49.6 million to repay US$43 million in debt owed to Liberty Metals & Mining Holdings LLC related to the Maseve platinum group metals mine in South Africa and for working capital.

Tiger Resources Ltd. secured up to US$30 million to support planned capital enhancements at its Kipoi copper project in Democratic Republic of Congo.

S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.