Morning from Copenhagen.

Oil is naturally higher this morning amid reports that Israel is planning an attack on Iran. It’s part of a broader move in input commodities, which are gradually repricing higher as growth and inflation bottom out and begin to turn in forward-looking indicators.

We continue to view oil and copper as particularly compelling. Notably, front-month copper contracts are only pricing in an 8% tariff, while year-end contracts suggest around 12.5% (a 50/50 probability on a 25% tariff).

You could argue that if the U.S. intended to impose a 10% tariff on copper, they would have done so already via existing policies. That makes a higher final rate via Section 232 more likely—leaving a potential premium to be captured in COMEX contracts. Markets have likely discounted this risk due to the lack of updates since late February.

Chart 1: Markets are only pricing an 8% tariff in the front copper contract