Edward Meir's Week in Review for AMU: Dec 15, 2025

Copper ended the week off by nearly 1% basis 3 months LME. But not before posting a fresh record high of $11,952/ton on Friday ($5.42/lb.) CME high-grade copper prices ended at just under $5.36, down about $0.10/pound on the week.

Aluminum and zinc ended off by about 1%. But there was no change at all in Midwest ali premiums, which remain stuck in the high $0.80s. Nickel and lead were the worst performers last week, losing roughly 2%. Tin bucked the trend to close slightly higher.

In the steel market, US valuations finished higher as more mills put through price increases.

We saw intense volatility in precious metals. Although most complexes sold off sharply on Friday, they still managed (unlike the base complex) to finish mostly higher on the week. Silver fell by nearly 3% on Friday after hitting an all-time high of $65.05 earlier. And it still finished up 5% on the week.

Gold finished slightly lower but is still hovering around a seven-week high. However, gold’s relatively subdued performance so far in December indicates that speculative flows could be rotating out of the metal and into other complexes, notably silver and platinum. The latter ended on Friday at a 14-year high.

Oil

In the energy space, oil prices have resumed their decline, ending the week 4% lower on concern about rising supply. WTI ended on Friday at $57.53 basis the nearby. Brent settled at $60.94.

Various agencies, including the IEA and the EIA, are upping their crude oil surplus estimates for next year. Only OPEC (not surprisingly) calls for a balanced market. Some of the estimates are unusually high. The IEA, for example, has global supply exceeding demand by 3.84 million barrels per day next year. That is equal to almost 4% of world demand.

Even the ongoing Ukrainian attacks on Russian energy assets are not making much of a dent in supply. In this regard, we learned that Russia’s oil product exports in November fell by just 0.8% from October levels. The completion of refinery maintenance apparently offset the recent slump in Black Sea exports. Meanwhile, the US-led Russian/Ukrainian talks are still ongoing. But they are apparently stuck on just how much land (if any) Ukraine can be persuaded to give up. And if Ukraine does cede land, what kind of security guarantees will it get in return?

In other developments, US naval forces intercepted an oil tanker off the coast of Venezuela. It was apparently heading to Cuba. Washington said that it will intercept more ships transporting Venezuelan oil if it must. The move steps up the pressure on Venezuelan President Maduro. And in a daring escape, the Venezuelan opposition leader, Maria Machado, left Venezuela by sea. She arrived in Oslo just hours after the Nobel committee formally awarded her prize to her daughter.

Natural gas

Outside of crude, we saw a dramatic decline in natural gas prices last week. Forecasts shifted to warmer weather for much of the US after very cold weather gripped most of the Northeast and Midwest over the past 10 days.

Values ended on Friday at $4.11/bcf, down by about 20% on the week and ending at a six-week low. Prices shrugged off a massive 177 bcf weekly draw. Why? Because the decline was associated with colder weather that is now on its way out.

Moreover, the EIA raised its output natural gas forecast for 2025 to 107.74 bcf – near a record-high. In addition, the US rig count is approaching a two-year peak. It suggests that output will increase well into next year as well.

Stocks and bonds

In the US equity markets, stocks ended the week mixed. The S&P 500 ended down by 0.6%, while the Dow finished with a 1.1% advance. NASDAQ was the worst performer, off some 1.6% as AI names came under renewed pressure. The pressure on AI sparked Friday’s sell-off in copper as well. Shares of Oracle and Broadcom were the biggest losers, rekindling valuation concerns in the broader AI/tech space.

Treasuries ended the week with losses in most tenors. But the two-year note bucked the trend, finishing at 3.53% and down three basis points on the week. The 10-year yield settled up five basis points at 4.19%. And finally, the dollar was on track for its third straight weekly drop.

Interest rates and the Fed

Of course, last week’s main highlight was the Federal Reserve policy meeting and Fed Chair Jerome Powell’s news conference that followed. The markets took both positively.
The committee voted 9 to 3 in favor of another 25-basis point cut. Because the vote was not unanimous, it was seen as dissension in the ranks. Powell did a masterful job in framing the split as more about honest differences in approach.

In fact, Powell noted that all policymakers agreed that inflation was too high and that the labor markets were weak. The Fed governors differed on just how to adjust policy. And markets were heartened to hear that the Fed was not contemplating any rate increases. (Especially because some other major central banks are thinking about doing just that.)

And neither did the Fed Chair leave an impression that the December cut was a “one and done” move. Instead, Powell said the Fed will be examining a large amount of data between now and the next Fed meeting. It will make its decisions accordingly.

When asked about the condition of the US labor market, Powell noted that there has been virtually no job growth so far this year. He also noted that jobs have actually been lost since the spring after downside revisions were factored in. However, there has been only a modest uptick in overall unemployment as labor supply has shrunk to counter the lack of hiring. Powell noted that while AI was having some impact on the labor markets, the number of jobs being shed on account of AI remains relatively low.

Inflation and the economic outlook

On inflation, Powell was unsure whether tariff-induced price pressures are going to be a one-time phenomenon or whether they will become ingrained and contribute to progressively higher inflation down the road. But he did say that, in the finished goods category, roughly half the increase the Fed is seeing is attributable to tariffs. That’s because goods are mostly imported, and it was not a conclusion the White House will be pleased with.

One problem for the US economy remains housing, with one reporter pointing out to Powell that the average age for a first-time home buyer is now 40. Powell acknowledged the affordability issue. He said that supply was restrained and that large parts of the market remain frozen because homeowners are locked into cheaper mortgages that prevent them from selling, buying, or moving. He acknowledged that the Fed could do little to impact the situation.

Another reporter pointed out that the bond market has not kept pace with the Fed’s rate reductions and that yields are actually higher than when the Fed first started cutting them back in September. Powell explained that the bond market is likely looking at stronger growth and/or inflation down the road. That may be why yields have not dropped more.

This was not a particularly reassuring answer. It reflects a disconnect between Fed policy and the reservations credit markets have about conditions going forward. One sector that has suffered from this disconnect is housing because mortgage rates have not followed the Fed’s downward rate trajectory that aggressively.

Powell pointed out that one positive for the economy is the fact that productivity gains remain in place, helping contain inflation while promoting higher incomes. He noted that these gains had been taking place even before the advent of AI—and so AI does not fully explain the increase.

Macro readings and other news from last week

• China will impose export license controls on certain steel products—including pig iron, scrap, semi-finished, and finished steel products—starting Jan. 1, 2026, according to government sources. The country exported 107.72 million tons of finished steel in the first 11 months of 2025, up by 6.7% from the same period of last year. Other than generating additional paperwork, we don’t see how these new measures are going to hinder the export flow.

• Canada announced last week that it would tighten its import quota for steel products from non-free trade agreement partners from 50% to 20% of 2024 levels. The quota for free trade partners like the US and Mexico would also be lowered to 75% of 2024 levels from 100% previously.

• Mexico’s Congress passed tariff measures against a variety of steel imports from Asian countries, increasing duties on roughly 1,400 goods by as much as 50% from countries Mexico does not have free trade agreements with. Steel, automotives parts, textiles, aluminum, and other products will all be among the items that will face higher duties. Imports into Mexico are already falling though, with government data showing steel imports from China down by 35% year-over-year. Imports from both Vietnam and Malaysia are off by 89%. On the flip side, Mexico boosted its steel imports from both the US and Canada in October by 5.5% and 1.1% y/y, respectively, from October 2024 levels.

• China’s Zhuzhou Smelter Group broke a supply contract with Teck Resources for zinc concentrate purchases out of Teck’s Red Dog mine in Alaska, citing high Chinese tariffs. The smelter reportedly agreed to pay a breakup fee to abrogate the contract. Separately, Beijing has been pushing zinc smelters to curb concentrate imports as opposed to accepting unprofitable treatment charges. This may have had something to do with the cancellation as well. It is possible that the cancellation may suit Teck as its output for next year is expected to fall from 484,000 tons to about 393,000 tons.

• China’s new bank loans rose less than expected in November, coming in at only $55 billion—well below both month-ago levels. Separately, a Reuters survey suggests that home prices are expected to decline by another 3.7% this year before stabilizing in 2027. Finally, out of China, inflation numbers revealed that November CPI was up by 0.7% from a year earlier, substantially higher than October’s 0.2% increase. The uptick was driven by rising food prices. Excluding food and fuel, the annual rate was unchanged at 1.2%.

Quote of the week

“For delivering the age of thinking machines, for wowing and worrying humanity, for transforming the present and transcending the possible, the Architects of AI are TIME’s 2025 Person of the Year,” TIME Editor in Chief Sam Jacobs

This week’s US macro readings

On Monday, we will be getting the December Empire State Manufacturing Survey (expected at 10, last at 18.7), along with the December homebuilder confidence index (expected at 38, unchanged from last month).

Tuesday brings us the delayed November US employment report, with 50,000 jobs expected to have been added versus the previous month’s tally of 119,000. The unemployment rate is expected to inch higher to 4.5% from 4.4%. Hourly wages are expected to push slightly higher as well. Shortly after that, we get the delayed October US retail sales figure (expected at +0.1%, last +0.2%). The ex-auto number is expected to come in at +0.2% (last +0.3%.) The S&P flash US services and manufacturing PMIs for December come out on Tuesday as well.

Nothing is reported on Wednesday, but several Fed officials speak that day.

Thursday brings us weekly initial jobless claims (expected at 223,000, last 236,000,) followed by the November CPI index (expected at 0.3%, unchanged from last month). The year-over-year reading is expected to push up to 3.1% (from 3%) while the CPI year-over-year forecast is expected to come in unchanged at 3%. Thursday also brings us the Philadelphia Fed manufacturing survey for December (expected at +3.6, last -1.7).

On Friday, we get November existing home sales (expected at 4.1 million, unchanged from last month) as well as December consumer sentiment readings (expected at 53.8, last 53.3).