Market pricing in rate hike expectations, silver futures maintain fluctuating trend, spot market transactions sluggish [SMM Daily Review]

Today, SMM's 10:00 a.m. price for the SGE Ag (T+D) was 15,450 yuan/kg, with premiums quoted in a range from parity against TD to +10 yuan/kg. The weighted average price was 2.53 yuan/kg, with overall premiums little changed from yesterday.

On the macro front, the latest data showed the probability of a 25 bp rate hike at the September FOMC meeting rose to 92.4%, while the probability of holding rates steady was only 7.6%. After August CPI came in slightly above expectations, market pricing has essentially locked in this hike, and funds have begun to trade the upcoming dot plot and Powell's remarks, watching for any signal of a second hike within the year. Overnight, long-end US Treasury yields continued to fluctuate at highs, and stronger oil prices further elevated tail risks to inflation. In the near term, elevated rate expectations continued to weigh on silver valuations, but geopolitical risks and physical safe-haven demand for precious metals provided support on the downside. Bearish factors have largely been priced in by the market ahead of time, and silver is likely to move sideways in the near term, with the trading center awaiting guidance from this week's FOMC decision.

In the spot market, the spot-futures price spread between SHFE and SGE T+D held at 25-30 yuan/kg. Morning quotes in Shanghai were concentrated at a discount of 25-20 yuan/kg against the most-traded SHFE 2610 contract. Overall quoted price spreads were relatively small, downstream inquiries were moderate, and purchasing was relatively cautious, mainly based on price negotiations for immediate needs, with transactions skewed toward the lower end of quotes. Overall, the market remained cautious and on the sidelines ahead of the rate decision, with trading relatively sluggish. Today, market premiums against the most-traded SHFE 2610 contract were quoted at a discount of 30 to 20 yuan/kg, with transactions concentrated from parity against SGE Ag (T+D) to a slight premium range.