Non-Farm Payrolls Achieve Major Rebound, US Fed December Rate Cut Probability Increases Significantly [SMM Copper Morning Comment Dec 9]

Last Friday evening, LME copper opened at $9,160/mt, fluctuated rangebound initially, reaching a high of $9,178.5/mt during the session. It then fluctuated downward, briefly rebounded near the close, and continued to decline, hitting a low of $9,088/mt before finally closing at $9,092.5/mt, up 0.03%. Trading volume reached 15,000 lots, and open interest was 272,000 lots. Last Friday evening, the most-traded SHFE copper 2501 contract opened at 74,850 yuan/mt, initially rose to a high of 75,020 yuan/mt, then declined, and fluctuated rangebound at low levels during the session, hitting a low of 74,580 yuan/mt. It slightly rebounded near the close and finally closed at 74,810 yuan/mt, up 0.36%. Trading volume reached 25,000 lots, and open interest was 154,000 lots. Macro side, US non-farm payrolls increased by 227,000 in November, exceeding the expected 200,000, while the unemployment rate slightly rose to 4.2%, in line with market expectations. US one-year inflation expectations rose to 2.9%, the highest in six months. After the data release, the US interest rate futures market estimated an 85% probability of a 25 basis point rate cut by the Fed in December, up from about 70% before the data release. Meanwhile, the probability of pausing rate cuts dropped from 30% before the release of employment report to 15%, leading to a rise in copper prices. Fundamentally, on the consumption side, although copper prices have risen, traders are still holding onto their stocks in anticipation of higher prices, resulting in overall low activity. Downstream saw a focus on annual long-term contract negotiations last week, with mediocre purchasing sentiment. However, spot premiums slightly rebounded due to stocking demand over the weekend. Looking ahead to this week, domestic copper arrivals are not expected to increase significantly, while year-end orders from some companies will boost consumption. Spot premiums are expected to remain stable today. Price-wise, US dollar pressure has eased somewhat, but the macro outlook remains unclear, and fundamentals still provide support. Copper prices are expected to maintain a fluctuating trend today.