Edward Meir's Week in Review for AMU: Dec. 21, 2025

Last week’s economic releases also helped sentiment. In this regard, November nonfarm payroll numbers rose by 64,000–well above the 30,000 expected and better than the decrease of 105,000 reported for September. (The government is not publishing October payroll data). However, the November unemployment rate ticked up to 4.6% from September’s 4.4%. Average hourly earnings in November were up by just 0.1%, falling short of the 0.3% consensus and well below September’s increase of 0.4%. Claims data was mixed. Initial jobless claims decreased by 13,000 to 224,000 last week. But the longer-run continuing claims average increased by 67,000 to 1.897 million.

On the inflation front, both the November CPI as well as the core reading came in at 0.2%, better than the 0.3% expected. (October data will not be published). However, the year-over-year readings showed a more significant drop. November CPI fell to 2.7% versus 3% in September. The core fell to 2.6% versus 3.0% in September. This was the first significant drop we have seen in some months in the yearly readings.

But market reaction was surprisingly subdued. This was possibly because the November data may have been tainted by missing October data, necessitating an interpolation to bridge the three months—always a risky undertaking when trying to report clean numbers. Moreover, November pricing remains volatile to begin with because it is typically skewed by Black Friday sales. As a result, we will need to see several more months of inflation readings (and revisions) before we get a better idea of the overall trend. A similar argument could also be applied to the jobs numbers, where we are missing October data.

In the US Treasury markets, the 10-year note ended the week pretty much flat. It closed Friday at 4.15%, but there were dips in shorter term maturities. The five-year ended six basis points lower to finish the week at just under 3.7%

Base and precious metals

In base metals, copper and tin were the primary standouts last week, a role that they have been playing for much of the last two months. Copper ended up 3.2% on the week and came within $72/ton of hitting $12,000/ton ($5.44/pound) mark. Tin advanced by 4.6%, closing Friday at a 3.5-year high of just under $43,000/ton ($19.50/pound). Aluminum finished up 2.7%, while nickel ended up by 1.5% on constructive supply-side announcements out of Indonesia. (More on that later.) Lead finished up by 0.8%, while zinc was the only metal that ended lower (down by 1.7% on the week). Next year will likely see metal prices pick up where they left off because tight supply and relatively low inventories should help keep prices buoyant.

Several banks are putting out price forecasts for next year. We will join in with our numbers in mid-January, when we publish our 2026 base metals outlook.

Last week, Morgan Stanley said that it expects aluminum prices to reach $3,250 by Q2 of 2026. It forecasts zincs to fall to $2,900/ton next year. “With LME inventories recovering as China exports more zinc, and mine supply growth to continue in 2026, we see modest downside to zinc prices in 2026,” the bank said.
It expects nickel to push towards $15,500/ton but sees lead trading at just over $2,000/ton amid an expected surplus and high inventories. The bank furnished no forecasts for copper or tin. But Morgan Stanley did say that it expects a 260,000-ton deficit for copper this year, followed by a significant, 600,000-ton shortfall for next year.

In the precious metals markets, silver soared to a record high on Friday. It ended at just above $67/ounce for an 8.4% gain on the week. Gold prices rose by 1.1%, settling at $4,387/ounce. We are also seeing additional money rotate into both platinum and palladium. Each finished at multiyear highs by week’s end as well.

Energy, geopolitics, and currencies

In the energy space, crude finished down by about 1% last week, adding to the 4% decline we saw in the week prior. Gasoline ended at a four-year low on Friday, losing $.04/gln on the week. Distillates shed $.07/gln, ending on Friday at a six-month low. In addition, the gasoline crack sank to its lowest levels since February.

Meanwhile, Ukrainian/Russian peace talks are continuing through American intermediaries, but so is the fighting. The Ukrainians struck a Russian shadow fleet oil tanker in the Mediterranean, the first such attack in that body of water since the conflict started. Separately, the Europeans upped their financial involvement. They agreed to lend Ukraine €90 billion euros ($105 billion USD) from their own coffers after failing to agree on a way to confiscate frozen Russian assets.

In the Americas, the US Navy continues to monitor Venezuelan tanker traffic. It detained a second tanker over the weekend and was pursuing a third. The Trump administration is also talking about possibly launching air strikes on the country.

Outside of crude, we saw another decline in natural gas. But the drop was not as sharp as the week before. Nevertheless, values finished below the $4/BCF mark for the first time since late October. Meanwhile, weekly EIA inventories came in at -167 Bcf, slightly below estimates. Natural gas stocks currently stand at about 1% above the five-year average and 2% below the one-year average.

In the currency markets, the general dollar index finished the week up by about 25 basis points basis versus the general index. The yen lost the most ground despite the Bank of Japan raising interest rates (as expected). However, Japan’s central bank governor was vague about the possibility of additional rate increases, undermining the currency in the process. For its part, the ECB left rates unchanged. But the Bank of England cut its rates by a 1/4 of a point to 3.75% in what was a close vote. The tight vote suggests limited room for further easing.

Macro readings and other news from the past week

• US retail sales came in unchanged month-over-month in October, worse than the 0.3% expected. The month prior was revised to -0.1% from +0.2%. Excluding autos, sales were up by 0.4%, slightly higher than consensus. But the prior month was revised to 0.1% from 0.3%.
• Existing home sales for November rose to 4.13 million from 4.11 million last month. lower mortgage rates aided the uptick in sales. But limited inventory, combined with high prices, got in the way of stronger selling activity.
• The December University of Michigan consumer sentiment came in at 52.9 (consensus 53.3). Pocketbook issues and labor market worries continue to weigh on consumers’ psyche.
• The Philadelphia Fed Index dropped to -10.2 in December (consensus: 2.9) from -1.7 in November. The headline reading, though, was also accompanied by a welcome 13-point drop in the prices paid index to 43.6 — the lowest since June.
• Out of Europe, flash December PMI readings showed the Eurozone’s manufacturing PMI dropping to 49.2 from 49.6. The services indicator fell more substantially, to 52.6 from 53.6. Elsewhere, Japan’s flash PMI came in at 49.7 (last 48.7). But services dropped to 52.5 from 53.2. India’s manufacturing PMI fell to 55.7 from 56.6, while the service component dropped to 59.1 from 59.8.
• US aluminum imports totaled 332,000 tons in September. That’s down 5.5% month-on-month and 30.5% lower year-on-year, according to data from the US International Trade Administration. Canada shipped 155,843 tons of ali into the US in September. That was 10% higher month-on-month but 44% lower than September 2024 levels. The UAE supplied nearly 28,000 tons of aluminum, a 38% month-on-month decline and 11% below year-ago levels. South Korea exported about 23,400 tons, 5% less than August but 29% higher year-over-year. There were more modest amounts of metal coming in from Bahrain (roughly 18,000 tons) and India (about 7,200 tons). The Canadian import numbers, however, are the ones we are most interested in—especially once the October and November import numbers come in. Why? Because that is when Midwest US Midwest premiums pushed substantially higher.
• Meanwhile, Canada’s “Buy Canadian” policy came into effect last week. Ottawa will now require the use of Canadian-produced steel, aluminum, and wood products in federal construction and defense projects. “By implementing these clear, targeted measures, we are sending a strong signal: the government stands behind workers and businesses,” Canada’s finance minister was quoted as saying. “We will be there to support them as Canada transitions from an economy dependent on a single trading partner to one that is resilient to global shocks.” His remarks echoed what Prime Minister Mark Carney said earlier in the week when he warned that the “decades-long process of an ever-closer economic relationship between the Canadian and US economies is now over.”
• South Korea’s POSCO will invest $582 million for a 20% stake in Hyundai Steel’s electric-arc furnace facility in Louisiana, according to an SEC filing. (Steel Market Update has the news here.)

This week’s US macro readings: Nothing comes out on Monday. On Tuesday we get the Q3 GDP report (delayed, expected at 3.2%, down from the previous reading of 3.8%). Durable goods orders for October follow (expected at -1.1%, last 0.5%) along with October industrial production (delayed, expected at 0.1%). November industrial production also comes out Tuesday (expected at 0.1%). Wednesday brings us weekly initial jobless claims (expected at 225,000, last 224,000). Nothing comes out on Thursday or Friday.

We wish our readers a very joyous Christmas week.