To The Moon

This week, the key pricing driver across major asset classes shifted from geopolitical risk premiums to a US rates shock. Oil prices retreated sharply from their mid-month peak as concerns over Middle East supply disruptions eased. Meanwhile, the 10-year US Treasury yield rose 30 basis points over the week to 5.26%, its highest level since June 2007. Falling oil prices failed to halt the rise in long-term yields, suggesting that term premiums and Treasury supply pressures had become the main drivers. As a result, equities, industrial metals and precious metals came under broad pressure.

 $黃金主連 2612(GCmain)$ $微黃金2612(MGC2612)$ $1盎司黃金2612(1OZ2612)$ $白銀主連 2612(SImain)$ $微白銀主連 2612(SILmain)$ $100盎司白銀主連 2612(SICmain)$ $WTI原油主連 2610(CLmain)$ $微型WTI原油主連 2610(MCLmain)$ $布油現金主連 2612(BZmain)$ $小原油主連 2610(QMmain)$ $COMEX銅主連 2612(HGmain)$ $鋁主連 2611(ALImain)$

As of the US market close on September 29, 2026, the weekly performance of key assets was as follows:

Figure 1. Asset Returns by Asset Class

As macro expectations continue to swing, price moves alone no longer capture the main forces driving asset performance. Inventory changes offer a clearer view of physical supply and demand, while fund flows better reflect allocation preferences. We therefore assess the latest trends in US equities, US Treasuries, crude oil, copper, aluminum, gold and silver through the lenses of inventories and flows.

Stocks and Bonds Shift to Simultaneous Outflows as the Rate Spread Widens to a Monthly High

Founded in 1940, the Investment Company Institute (ICI) is a leading association for the US fund industry. Its data cover about 98% of assets held by US funds registered under the Investment Company Act of 1940. Its fund flow data are therefore widely viewed as an authoritative gauge of subscriptions and redemptions in US mutual funds. ICI also publishes long running data on assets and flows for regulated funds in the United States and globally. Its consistent methodology and broad coverage make these data a common reference for brokerages, research firms and financial media.

In the week ended September 16, US equity mutual funds recorded net outflows of $28.071 billion, 3.1 times the previous week’s level. Domestic equity funds accounted for $24.834 billion, indicating that redemption pressure remained concentrated in the US market. Equity funds have posted net outflows for five consecutive weeks, totaling about $115.2 billion. Bond mutual funds reversed the previous week’s $664 million net inflow and recorded $6.476 billion in net outflows. Taxable bond funds and municipal bond funds saw outflows of $4.201 billion and $2.276 billion, respectively. Long term mutual funds posted total outflows of $36.704 billion, 3.8 times the previous week’s level. Fund flows shifted from equity outflows and bond inflows to simultaneous outflows, signaling weaker risk appetite.

After including ETFs, mutual funds and ETFs recorded combined net outflows of $10.098 billion this week. Net ETF issuance reached $26.606 billion, offsetting about 70% of mutual fund redemptions. However, equity ETFs absorbed only 52.6% of equity mutual fund outflows, leaving the buffer insufficient to provide full coverage. Combined net inflows into bond funds fell steadily from $20.679 billion five weeks earlier to $3.244 billion, indicating much weaker demand. Meanwhile, commodity funds recorded net inflows for five consecutive weeks, totaling about $10.419 billion. This week’s inflow reached $2.124 billion. Although the increase partly reflected a low base, it still points to rising demand for inflation hedges.

Figure 2. US Fund Net Flows (Equity and Bond Funds; Source: ICI)

$標普500ETF(SPY)$ $標普500(.SPX)$ $SP500指數主連 2606(ESmain)$ $微型SP500指數主連 2606(MESmain)$ $微型SP500指數2606(MES2606)$ $道瓊斯指數主連 2606(YMmain)$ $微型道瓊斯指數主連 2606(MYMmain)$ $道瓊斯(.DJI)$ $道瓊斯ETF(DIA)$ $納斯達克100指數(NDX)$ $NQ100指數主連 2606(NQmain)$ $納斯達克(.IXIC)$ $納指100ETF(QQQ)$ $微型NQ100指數主連 2606(MNQmain)$ $微型10年美債收益率主連 2605(10Ymain)$ $10年美債主連 2606(ZNmain)$

At the US close on September 29, the 10 year and 3 month Treasury yields stood at 5.26% and 4.25% respectively, leaving a positive spread of about 101 basis points. Since September 22, the long end had risen 30 basis points and the short end 9 basis points, widening the spread by 21 basis points. This reversed the previous week’s move, when the long end fell 4 basis points, the short end rose 5 basis points and the spread narrowed by 9 basis points. The spread exceeded 100 basis points for the first time in September and reached a monthly high. The 10 year yield climbed to its highest level since June 2007, matching the 5.26% peak recorded then. By comparison, the highest level between 2008 and 2025 was only 4.98%. The 30 year yield also rose 30 basis points to 5.59%, 24 basis points above its 2007 peak. The 10s30s spread remained at 33 basis points, indicating a parallel upward shift across the long end.

The current yield curve reflects both a repricing of the policy path at the short end and a higher term premium at the long end. The spread between 3 month and 1 month Treasury bills widened from 7 basis points in early September to 21 basis points. This suggests that the market expects policy rates over the next three months to exceed the current level. Meanwhile, Brent and WTI crude have fallen 12.2% and 9.9% from their September 15 peaks, respectively, yet long term yields still surged 30 basis points. This divergence suggests that oil related inflation cannot explain the latest rise in long term yields. Higher term premiums and Treasury supply pressure are more likely drivers.

Figure 3. US 10 Year and 3 Month Treasury Yields (Source: US Treasury)

Key Asset Inventory Update

1. Crude Oil: Inventories Return to a Weekly Build as the Year over Year Surplus Widens; Prices Retreat, Narrowing the Divergence

According to the latest EIA data, US commercial crude inventories excluding the SPR stood at 426.4 million barrels in the week ended September 18, 2026. Inventories rose by 2.97 million barrels from the previous week and were 2% above the five year average. Cushing inventories increased by 2.27 million barrels, or 10.5%, to 23.75 million barrels. Both shifted from modest draws to builds, with a sharper increase at Cushing.$WTI原油主連 2610(CLmain)$ $小原油主連 2610(QMmain)$

Inventory levels matter more than a single week’s change. Commercial crude inventories were 2.81% above last year and 3.23% above the same period two years ago, widening the year over year surplus. Cushing inventories also recovered from about 10% below last year to broadly flat at 0.04% higher. They were also 4.03% above the level two years ago. As a result, the previous report’s structural case that deliverable inventory tightness was concentrated at Cushing has largely disappeared within one week.

The divergence between inventories and prices has also started to narrow as prices move back toward fundamentals. Brent spot prices fell 12.2% from $130.80 per barrel on September 15 to $114.89 on September 22. WTI dropped 9.9% from $107.02 to $96.41, falling back below $100. Although weekly average prices still rose to $124.15 for Brent and $103.54 for WTI in the week ended September 18, daily prices had already peaked. This indicates that the supply disruption premium is unwinding.

Tightness remains concentrated in seaborne crude and refined products. The average spread between Brent and WTI widened to $20.61 per barrel. Gasoline and distillate inventories were 6% and 12% below their five year averages, respectively, while crude inventories were 2% above average. The latest build mainly reflected a drop in crude exports from 4.83 million to 3.28 million barrels per day. Seasonal refinery maintenance also contributed, while lower imports partly offset the increase. The build therefore points to a short term rebound after export momentum faded, with little evidence of a sustained supply glut.

Figure 4. US Commercial Crude Oil Inventories (Five Year Range)

Figure 5. Cushing Crude Oil Inventories (Five Year Range)

$美國原油ETF(USO)$$WTI原油主連 2607(CLmain)$ $小原油主連 2607(QMmain)$ $微型WTI原油主連 2607(MCLmain)$

2. Copper: Combined Exchange Inventories Retreat from Their Peak as COMEX Builds Slow; Tariff Premium Falls to Zero

Exchange data show that LME copper inventories fell from a September 17 peak of 255,900 tonnes to 251,400 tonnes as of September 28. SHFE inventories declined to 47,100 tonnes as of September 24, down 15.9% from September 18. The exchange was closed on September 25 for the Mid Autumn Festival. Meanwhile, COMEX inventories reached a new high of 772,400 short tons, or about 700,700 tonnes. Combined inventories across the three exchanges fell 0.81% from their mid September peak to 999,200 tonnes. COMEX accounted for 70.1% of the total.

Combined LME and SHFE inventories fell by 12,700 tonnes this week, while COMEX added only 4,510 tonnes, absorbing about 36% of the outflow. Total visible inventories therefore declined by a net 8,166 tonnes, suggesting that cross market transfers can no longer fully explain the latest draw. However, LME inventories remain 74.7% above last year, while COMEX inventories have risen 23.8% since mid May. The current pattern therefore points to inventories peaking at elevated levels, while sustained destocking has yet to emerge.

$COMEX銅主連 2612(HGmain)$ $微型銅主連 2612(MHGmain)$ $迷你銅主連 2612(QCmain)$

Figure 6. COMEX Copper Inventories (Short Tons; Source: Wind)

Figure 7. Shanghai Copper Inventories (Tonnes; Source: Wind)

Figure 8. LME Copper Inventories (Tonnes; Source: Wind)

The key turning point is the elimination of the US tariff premium. COMEX copper now trades at about $14,466 per tonne, a discount of roughly $78 to LME copper. The premium of about $305 per tonne at the monthly peak has been fully erased, effectively closing the cross market arbitrage window. Continued COMEX inventory growth may mainly reflect shipping lags. Since September 4, the average weekly increase has slowed by about 85% to 1,363 short tons, compared with 9,366 short tons in August. Inventories also posted their first weekly decline between September 11 and 18. However, the latest weekly increase rebounded to 3,450 short tons, including a gain of 1,522 short tons on September 28. This is consistent with the four to eight week shipping cycle for cargoes booked while the premium was available. Inventory changes therefore reflect delayed shipments and can diverge from the current price spread. Future risks now center on elevated US inventories returning to global markets and the resulting repricing pressure.

3. Aluminum: LME Inventories Flatline at Low Levels as SHFE Warrant Cancellations Accelerate; Inventory Support Remains Limited to London

Inventories diverged sharply across the three exchanges. LME aluminum inventories stood at 241,375 tonnes on September 29, down only 750 tonnes, or 0.31%, from the previous week. They remained unchanged for five consecutive sessions from September 23 and declined only 2.21% over the past five weeks. In the week ended September 24, SHFE warehouse warrants fell by 37,711 tonnes, or 20.4%, to 146,691 tonnes. However, total inventories declined by only 14,928 tonnes, or 4.7%, to 306,026 tonnes. Warrants continued to fall and reached 128,743 tonnes on September 29. COMEX inventories rebounded 21.7% to 1,679 tonnes but accounted for only 0.31% of combined inventories. Total stocks across the three exchanges were 372,000 tonnes using SHFE warrants and 549,000 tonnes using SHFE total inventories. Based on August trading data, the implied average SHFE aluminum price was about RMB23,884 per tonne, up 15.65% from last year but still 4.2% below the April peak. August is the latest available monthly data.

The low inventory thesis currently applies only to London. SHFE total inventories were 145.6% above last year, equivalent to 2.46 times the previous year’s level, and had risen 135.7% this year. The current level ranks in the 80.3rd percentile since September 2021. It is also 1.41 times the five year median and exceeds every reading in 2024 and 2025. Although inventories have fallen 42.1% from the five year peak of 528,885 tonnes in June, the absolute level remains elevated.

Falling warrant volumes provide limited evidence of physical destocking. During the comparable periods from September 11 to 18 and September 18 to 24, the average daily decline in SHFE warrants accelerated by 59%, from 3,953 tonnes to 6,285 tonnes. In contrast, the average daily decline in total inventories slowed by 35%, from 3,818 tonnes to 2,488 tonnes. The share of unwarranted stocks rose from 39.0% to 52.1%, suggesting that financing, delivery needs and cross market spreads drove most of the warrant cancellations. Five consecutive days of unchanged LME inventories also provide little evidence of tighter global spot supply. With the 10 year US Treasury yield at 5.26% and industrial demand signals remaining weak, the low inventory thesis is losing relevance and cannot support global scarcity pricing.$COMEX銅主連 2612(HGmain)$ $微型銅主連 2612(MHGmain)$ $迷你銅主連 2612(QCmain)$

Figure 9. LME Aluminum Inventories (Tonnes; Source: Wind)

Figure 10. COMEX Aluminum Inventories (Metric Tons; Source: Wind)

Figure 11. Shanghai Aluminum Inventories (Tonnes; Source: Wind)

4. Precious Metals: Rate Spike Triggers Profit Taking as Silver Falls 1.89 Times as Much as Gold; “Extreme” Gold Positioning Reflects the Disappearance of Shorts

The 10 year US Treasury yield rose 30 basis points this week to 5.26%, its highest level since June 2007, prompting a sharp pullback in precious metals. LBMA gold fell 3.84% from $4,329.55 per ounce on September 22 to $4,163.40 on September 29. Silver dropped 7.27% from $65.635 to $60.865. Silver’s decline was 1.89 times that of gold, lifting the gold to silver ratio to 68.40. Year to date returns for gold and silver fell to negative 4.68% and negative 15.45%, respectively. Their drawdowns from yearly peaks reached 22.97% and 48.62%. COMEX gold and silver inventories stood at about 27.3 million and 332 million ounces, respectively. However, both have recovered moderately from their yearly lows, weakening the price support from tight inventories.$黃金主連 2612(GCmain)$ $微黃金2612(MGC2612)$ $白銀主連 2612(SImain)$ $白銀主連 2612(SImain)$

Figure 12. COMEX Gold Inventories (Troy Ounces)

Figure 13. COMEX Silver Inventories (Troy Ounces)

Positioning data should be viewed with the reporting lag in mind. The latest CFTC data cover the period through September 22 and therefore exclude the subsequent sharp decline. The actual scale of position cuts will become clear when the October 2 data are released. Noncommercial net long positions in gold stood at 225,853 contracts, equal to 54.71% of open interest and ranking in the 95th percentile over the past five years. However, gross long positions ranked only in the 40th percentile, open interest in the 12th percentile and short positions in the first percentile. The extreme net long ratio therefore mainly reflects the near elimination of shorts, with long positioning far from crowded. This structure provides little support from short covering when prices weaken. Between September 15 and 22, long positions fell by 4,077 contracts while shorts increased by 408, reducing net longs by 4,485 contracts, or 1.9%. This suggests that the adjustment had already begun through active long liquidation.

Figure 14. COMEX Gold Noncommercial Long and Short Positions (10,000 Contracts)

Silver faces a contraction in market capacity. Noncommercial long positions stood at 34,701 contracts, short positions at 9,257 and net longs at 25,444, while open interest totaled 106,474 contracts. Both speculative positions and overall market size were near historical lows. Yet net longs accounted for 23.90% of open interest, ranking only in the 51st percentile since 1999 and the 56th percentile over the past five years. This points to a broad retreat by both longs and shorts, with little evidence of crowded positioning. During the week, longs fell by 694 contracts and shorts by 812. Since shorts declined more sharply, net longs rose by 118 contracts, or 0.5%. Gross longs and net longs therefore sent opposing signals, so the two measures should be clearly distinguished. With copper inventories elevated and industrial demand showing no improvement, silver’s industrial exposure remains a drag.

Figure 15. COMEX Silver Noncommercial Long and Short Positions (10,000 Contracts)

Follow the Money, Take Stock of Inventories

Overall, inventory trends diverged sharply across regions and commodities this week. US commercial crude inventories were 2% above their five year average, while year over year tightness at Cushing largely disappeared. However, refined product inventories remained low. Combined copper inventories across the three major exchanges retreated from their peak, with COMEX accounting for 70.1% of the total. Inventory growth slowed by about 85% after the tariff premium fell to zero. In aluminum, LME inventories remained flat at low levels, while SHFE inventories still ranked in the 80.3rd percentile of their five year range. Warrant cancellations also far outpaced physical destocking. COMEX gold and silver inventories recovered moderately from their yearly lows, weakening the support from tight inventories.

Equity mutual funds recorded weekly outflows of $28.071 billion, while bond funds reversed to outflows of $6.476 billion. After including ETFs, equity and bond funds still posted combined outflows of $10.098 billion. The 10 year US Treasury yield rose to 5.26%, while key assets declined broadly. WTI, silver and aluminum were among the worst performers. CFTC data show that gold’s high net long ratio mainly reflected shrinking short positions, while longs had begun active liquidation. Silver’s net long ratio remained near its historical median, but declining positions on both sides reduced market liquidity. Without a clear turn in long term yields or sustained physical destocking, oil’s geopolitical premium may continue to unwind. Precious metals are likely to remain volatile, while weak industrial demand will add further pressure on silver.

What will next week bring? We will see.