FxWirePro: Daily Commodity Tracker - 21st March, 2022 
Best Gold Stocks to Buy Now: AABB, GOLD, GDX 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Last week Norges Bank delivered the long awaited cut and also a clear easing bias for the September meeting. The latter came as a complete surprise to the market which sent the FRA-strip down by about 10bp. Nordea Bank have recommended selling FRAs for a while and still think there is more downside to the strip for two reasons:
- 1) lower money market spreads
- 2) further rate cuts.
Given Norges Banks clear easing bias expectations are likely to be tilted towards a cut. This could easily contribute to lower the fixing by at least 10-15bp and let the September contract expire at around 1.10%. As such, downside from today's level of 1.19% is noticed. The September FRA contract expires three days before the meeting and will settle on expectations rather than the actual outcome of the meeting, so a surprise on hold decision will not be an issue for this trade.
"We also think that further rate cuts are likely next year, particularly based on the prospects of falling inflation. This is not at all reflected in the FRA-strip which is close to flat from the December contract. We have for a long time argued for inversion trades a little out on the FRA-strip on the basis that the easing cycle would prove slow and long lived and continue to really like this theme. Currently we prefer the Dec15/Jun16 spread at -2.5bp", said Nordea Bank in a report on Friday.
"Taken together, the first contract and bias for further inversion of the strip argues for selling FRAs also a little out on the strip such as the June 16 contract at 1.08%. Just one cut should suffice to take us below that level and chances are that we get more", adds Nordea Bank.
