The way macro pricing works is being reshaped by the term structure of interest rates. The U.S. 10-year Treasury yield fell back to roughly 5.08% to 5.11% within two weeks, while the 30-year yield stood at about 5.43% over the same period.
This pullback occurred in the same window as weakness in AI-related share prices and broad pressure on U.S. equities, suggesting that valuation corrections in the technology sector lowered financing expectations and drove a convergence in Treasury term premiums, while falling stocks and a softer dollar provided a channel for safe-haven capital to flow back into Treasuries.
This decline looks more like a phased release of crowded positioning rather than a complete reversal of rate-hike expectations.
When interest rates stay elevated and spread globally through a stronger dollar, local-currency financing costs rise in emerging markets and commodity-importing countries, weighing on capital expenditure and restocking appetite. High rates also suppress real estate and manufacturing investment, which in turn reduces end-use demand for steel, non-ferrous metals, and energy chemicals.
Crude oil is the sector most easily amplified by event-driven moves. Under IEA data, Gulf producers led by Saudi Arabia raised September crude exports by 4.4 million barrels per day month-on-month to 13.9 million barrels per day, recovering to more than 75% of pre-war levels. Ship-to-ship transfers in the Gulf of Oman were active, pushing combined rerouted exports up by 970,000 barrels per day to 5.6 million barrels per day. Including incremental volumes through rerouted channels, total Middle East outbound shipments have rebounded to a range of 13 million to 14 million barrels per day. The Dubai spot premium to Brent is a proxy for verifying this: the retreat in the Middle East premium shows that loading-side tightness has largely eased, but absolute prices remain fairly firm, supported by high freight costs and refinery capacity losses.
Negative feedback in the chemicals sector is taking shape, with methanol providing the clearest example. Domestic coal-to-methanol margins once reached nearly 1,400 yuan per ton, an extremely unusual range historically, and such high profits themselves encourage producers to maintain high operating rates and keep supplying the market. At the same time, last Saturday's methanol auction transactions fell significantly short of expectations, domestic ports saw phased inventory building, and inland markets also showed clear inventory accumulation. East China MTO units are shut down amid disrupted overseas methanol feedstock supply, affecting about 1 million tons of monthly demand, while East China's average monthly imports during peak periods are also about 1 million tons. This means the supply gap is being matched by simultaneous demand destruction, with inventories building in phases. Restarting a unit from shutdown costs on the order of 10 million yuan, and without a smooth recovery in overseas feedstock supply, restarting is not economical. As long as the constraint of disrupted overseas supply is not removed, MTO restarts lack economic motivation, and the demand side cannot repair itself, so this negative feedback is not a short-term phenomenon.
For gold, using U.S. Treasury yields, inflation, the dollar index, and crude oil as explanatory variables, the traditional framework currently implies a gold price of about $3,200 per ounce, while actual spot gold is around $4,200 per ounce, leaving a disturbance premium of about $1,000 per ounce. Central bank gold purchases operate on a trend horizon of years or longer and are not enough on their own to provide short-term upward support; their importance lies in lifting the long-term price center. By contrast, recent gold ETF increases against a hawkish backdrop carry more trading significance. If the Middle East situation becomes prolonged and difficult to end, market pricing will shift toward stagflation logic, with inflation expectations rising systematically and real rates being suppressed, making gold more optimistic over the long cycle. If the Middle East issue is substantively resolved, the crude oil risk premium will fade, and gold and oil will likely move in opposite directions, though gold may still find support from other long-term variables. Positioning focuses on the judgment that the gold-silver ratio will move into the 80 to 85 range.
In agricultural products, the pattern of strong oils and weak meals is strengthening. The USDA October report raised U.S. soybean yield to a record high of 53.1 bushels per acre, and Brazil's soybean planting progress reached 15.6%, above the five-year average of 15.2%, making the bumper-crop narrative hard to overturn during the harvest season. At the same time, U.S. corn yield was unexpectedly raised to 181.2 bushels per acre and hit the limit down, transmitting bearish pressure to soybeans through pricing, while the oil-meal ratio has the potential for breakout moves in both rapeseed oil versus rapeseed meal and soybean oil versus soybean meal.
The pricing logic for coal is undergoing marginal changes. The theme of ensuring supply has been fully priced in, but actual delivery of supply increments faces difficulties. Safety supervision, production quotas, and transportation maintenance form a triple constraint: coal mines are cautious about increasing output, the size of remaining production quotas directly determines fourth-quarter room for higher output, and under strict verification, exceeding quotas risks suspension. The Daqin Line began a 20-day autumn concentrated maintenance on October 7, reducing daily shipments from about 1.2 million tons to around 1 million tons, causing a phased contraction in inbound volumes at Bohai Rim ports. The number of trucks clearing customs at Ganqimaodu briefly jumped to 873 this week, and it is worth watching whether this level is sustained. Temperature is an underappreciated variable in winter pricing: the National Climate Center confirmed that a super-strong El Nino event formed in September 2026, of the eastern type, with most of the country expected to see temperatures near or above the same period in normal years, but eastern Southwest China, Gansu, Ningxia, and Chongqing likely lower, with some areas more than 2 degrees Celsius below normal. The market is already anticipating the possibility of notably low temperatures in southern China this winter. As of October 16, thermal coal end-user inventories in coastal and inland regions remained around 120 million tons, down 6.3% year-on-year, Bohai Rim port inventories were 23.345 million tons, down 3.2% week-on-week, and power plant inventories in 17 inland provinces were about 15 million tons lower than a year earlier, with rigid winter restocking demand beginning to rise. The Qinhuangdao 5,500 kcal thermal coal ex-warehouse price was 1,028 yuan per ton, up 30 yuan per ton week-on-week, the highest since October 2023. Among samples from Qinhuangdao, Caofeidian, and Huanghua ports, inventories of 4,900 kcal and above medium-to-high-calorific coal fell by 980,000 tons, with the share dropping from 77.8% to 66.8%.
Logic statement
The U.S. 10-year Treasury yield briefly broke above 5.3% in early October, a historic peak since 2002, then fell back to about 5.08%-5.11% over the following two weeks, while the 30-year Treasury yield was about 5.43% over the same period. This change occurred in the same time window as weakness in AI-related share prices, broad pressure on U.S. equities, and a decline in the dollar index. From a transmission perspective, technology-sector valuation adjustments may have driven a convergence in Treasury term premiums through changes in financing expectations; at the same time, falling U.S. equities and a weaker dollar also created conditions for safe-haven capital to return to Treasuries. From a positioning perspective, September Treasury short positioning was already in a crowded range near historic extremes. Crowded positioning itself does not determine direction, but it means the market's reaction to marginal changes may be amplified. Therefore, this round of yield decline is closer to a phased release of crowded trades and is not yet enough to conclude that rate-hike expectations have fundamentally reversed.
When U.S. Treasury yields remain high and spread globally through a stronger dollar, the suppression of commodity demand has a relatively clear transmission path. Higher local-currency financing costs in emerging markets and commodity-importing countries will weaken capital expenditure and restocking willingness; high rates also curb real estate and manufacturing investment, thereby affecting end-use demand for steel, non-ferrous metals, and energy chemicals. In commodity markets, this process mainly shows up as a systematic downward revision of aggregate demand expectations and negative feedback between dollar-denominated commodity prices and emerging-market purchasing power.
In energy, Middle East crude supply is recovering, but logistics costs and refined product shortages are still constraining a move lower in the price center. IEA data show that Gulf producers led by Saudi Arabia increased September crude exports by 4.4 million barrels per day month-on-month to 13.9 million barrels per day, recovering to more than 75% of pre-war levels. Over the same period, total oil flows through the Strait of Hormuz rose by 3.7 million barrels per day to 10.9 million barrels per day. Ship-to-ship transfers in the Gulf of Oman were active, and transport increments through rerouted channels also supplemented the export recovery. However, a recovery in shipment volumes does not mean importing countries' procurement costs fall in tandem. With transport costs clearly elevated, crude landed costs remain supported. Recently, the premium of Dubai crude to Brent narrowed significantly, indicating the market has begun trading the recovery in Middle East crude flows, and the possibility of better-than-expected supply being delivered has risen somewhat.
The recovery in crude supply has not yet led to a clear decline in global oil prices, mainly for three reasons. First, refined products still face a substantial supply gap, and damaged refining capacity has kept cracking spreads high, keeping refined product prices elevated and supporting crude prices. Second, geopolitical uncertainty still leaves oil with a risk premium. Third, even if cargo supply gradually recovers, high logistics costs will delay the decline in end-user procurement costs, so freight trends become an important basis for judging whether supply repairs can be effectively transmitted. Looking ahead, with inventories already at extremely low levels, if oil prices rise further, negative demand feedback will become an important constraint, with China especially worth watching. China's crude imports have fallen noticeably since August, which may mean that China's demand recovery is unlikely to become the main driver of further oil price gains in the next stage.
Against this backdrop, it is necessary to further watch whether negative feedback from high oil prices on chemical demand deepens, with methanol and the operation of East China methanol-to-olefins (MTO) units being key observation targets. Some East China MTO units are highly dependent on imported methanol as feedstock. Estimates suggest that if the relevant units were all shut down, the corresponding monthly methanol demand reduction could reach about 1 million tons, roughly comparable to East China's previous monthly methanol import scale of about 1 million tons. This means that in a scenario where import supply and downstream demand contract simultaneously by similar amounts, the domestic methanol supply-demand balance may not necessarily show a substantial gap. This judgment also needs to be understood alongside unit restart costs and domestic supply elasticity. The cost of restarting an MTO unit after shutdown is relatively high, possibly close to the order of 10 million yuan. If overseas methanol supply has not achieved a sustained and smooth recovery, units would still face feedstock shortages and the risk of another shutdown after restart, making restart uneconomical. Therefore, a brief improvement in import supply may not quickly drive a recovery in related demand. At the same time, based on current estimates, domestic coal-to-methanol margins have reached 1,300-1,400 yuan per ton, and such high profits are strengthening expectations for domestic unit restarts, with additional new production lines potentially coming online gradually. If domestic supply increases while coastal MTO demand recovery remains constrained, the methanol supply-demand structure may change marginally. Therefore, over the next half month to one month, long positioning in liquid chemicals should be approached cautiously.
In precious metals, recent gold price performance suggests that the traditional pricing framework may need to incorporate new explanatory variables. Using U.S. Treasury yields, inflation, the dollar index, and crude oil prices as core variables, the original framework estimates a corresponding gold price of about $3,200 per ounce, while the current actual price is clearly above that level. This raises the need to further discuss where the premium beyond the traditional framework comes from. We believe this premium is mainly related to central bank gold purchases, gold ETF increases against the trend, and long-term narratives surrounding U.S. fiscal deficits and dollar credit. These factors are difficult to falsify over the next six months to a year and may therefore continue to support gold prices. Under this judgment, downside room for gold is relatively limited; if rate-hike expectations become more fully priced, upward elasticity may instead be released again.
The Middle East situation is an important variable affecting the above judgment. If the conflict continues, market inflation pricing may shift further toward stagflation, increasing the likelihood that rising inflation drives real rates lower, which would benefit gold. If the Middle East situation shows clear, better-than-expected easing, falling inflation pressure may also push rate conditions to loosen, which would likewise be expected to support gold. Therefore, we are not pessimistic on gold, but we still have some concerns about current valuations.
In the coal market, disagreement is mainly concentrated between supply policy, actual production recovery, and winter demand. Marginal changes on the supply side are worth watching, but whether they can form sustained increments still needs verification from actual data; at the same time, winter demand expectations may become a new pricing variable. Over the past three months, changes in coal supply policy have been an important factor affecting market pricing, and the main paths to watch are ensuring supply and stabilizing prices, approved capacity increases, and import supplementation. Recently, customs clearance volumes at Ganqimaodu have generally been at relatively low levels, but around October 16, single-day truck clearances rose from about 600 to nearly 900, a level rarely seen in the previous roughly 15 days. If this clearance intensity can be maintained, it would mean a marginal improvement in import supply and pressure coking coal prices. However, whether single-day data can translate into sustained supply increments still needs verification.
Domestic supply recovery also faces constraints. Safety inspections and overproduction checks are still affecting the pace of coal mine restarts, and the size of remaining production quotas directly determines fourth-quarter room for higher output. Under stricter verification, actual production growth may still be limited, and production increase expectations cannot be directly equated with supply delivery. On transportation, the Daqin Line began a 20-day autumn concentrated maintenance on October 7. During maintenance, daily shipments fell from about 1.2 million tons under normal conditions to about 1 million tons, helping drive a phased rebound in coal prices. Future pricing needs to watch both the recovery in transportation after maintenance ends and actual production increments.
Winter weather may bring regional differences on the demand side. Against the backdrop of a super-strong El Nino, the potential risk is that while most of the country has above-normal temperatures, warmer conditions in the north and periodic low temperatures in the south may coexist, and the south could still experience extreme low temperatures. Seasonal average temperatures and periodic extreme weather need to be observed separately, and the latter may have a more concentrated impact on thermal coal demand. Guangzhou's meteorological department expects the extreme minimum temperature in Guangzhou this winter could reach 1.5-4.5 degrees Celsius, slightly lower than the same period over the past 30 years, with a relatively high possibility of strong cold waves. If periodic low temperatures in the south materialize, they will provide some support for local power plant coal consumption, but this demand increment still needs to be verified by subsequent weather and daily consumption data. Therefore, the coal market deserves continued attention over the next two months. Combined with methanol's currently high production margins and coal's potential winter demand support, further attention can be given to the arbitrage idea of shorting methanol production margins, though its margin of safety needs to be tested through changes in coal supply and demand and the recovery of methanol supply.
In agricultural products, the market is currently in the late stage of the Northern Hemisphere harvest season, new-crop opening prices are gradually becoming clear, and the market has entered a stage of reassessing cost support and valuation levels. Variety selection can proceed from three dimensions: using planting costs to measure downside room, using historical price percentiles to judge valuation levels, and combining actual production changes for the year to identify whether there is a production-reduction driver. Taken together, in 2026 domestic agricultural products, production reduction is not a broad trading theme; related narratives have mainly appeared in varieties such as domestic soybeans and peanuts. Domestic soybeans have already experienced relatively full upward pricing, and support from production-reduction expectations may already be largely reflected. By contrast, some varieties without obvious production reductions but with valuations already at low levels deserve gradual attention, including corn and red dates.
For corn, the current northern port collection cost is about 2,100 yuan per ton. We believe that over the next half month or so, this level may still constitute important support for nearby contracts, and the probability of a sustained, deep break below it is relatively limited. On an annual scale, this area may also offer some long-side margin of safety. However, bottom formation may be a lengthy process, and cost support itself does not mean prices will rise immediately. To seek further upward drivers, overseas agricultural logistics risks in the fourth quarter are worth tracking closely. CBOT agricultural products have already undergone a relatively deep correction, and valuations are gradually gaining some margin of safety. At the same time, there is a risk that Russia-Ukraine grain transshipment intensity and transport capacity fall short of expectations: after attacks on Odesa and related Russian ports, facility repairs and transport recovery may take a long time, limiting the effective release of new harvest-season supply to international markets. For alternative transport routes, focus on the Danube and Arctic directions. Low water levels on the Danube and further declines will limit inland waterway shipping capacity; for the Arctic direction, winter navigation conditions need attention. If the routes actually used for relevant cargoes are affected by ice in November-December, alternative transport capacity may also be constrained. Under such a scenario, even if Northern Hemisphere wheat and corn harvests bring new supply, limited export transport capacity from Russia and Ukraine may still prompt the market to reprice logistics risk premiums. This logic may first appear in overseas agricultural prices; if domestic related varieties have previously corrected deeply, they may also gradually offer long-side margin of safety during an overseas price recovery.
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