Commodity prices retreat after surging to multi-month-highs due to profit-taking and rebound in USD. Crude oil price drops from a 7-month high to 67.85 as news showed that OPEC production probably rose in May. Moreover, higher-than-expected unemployment rate in the Eurozone increased worries about economic recovery.

Surveys showed that OPEC might have increased oil output by 1.5% to 28.15M bpd in May, the biggest gain since 2007 as some members who have been suffering from production cuts in previous months raised production as oil prices rise. OPEC-11 members pumped 25.76M bpd, about 0.9M bpd more than the target. The organization decided to keep production quota unchanged in May while emphasized stricter compliance. However, research indicated that not all members were producing as they were assigned as some countries, such as Iran and Angola, faced greater fiscal pressure than others.

Saudi Arabia continued to produce below quota in May despite a 75K barrel increase in daily production to 8M bpd. UAE, Kuwait and Qatar also produced below quota during the month. Members such as Iran, Nigeria and Angola produced significantly above quota. One surprise came from Venezuela which reduced output by 25K barrel to 2.1M bpd, the only production decline.

Eurozone's unemployment rate rose to 9.2% in April, higher than consensus of 9.1% and 8.9% in the previous month. This is the highest level since 1999.

Stock market is mixed in Asia and Europe. The MSCI Asia Pacific Index added 0.2% and Nikkei 225 Stock Average climbed 0.3% to 9704. However, South Korea's KOSPI Index slid 0.2% while Hong Kong's Hang Seng Index dropped 2.6%.

The dollar Index gained after plunging to the lowest level in 2009 Monday. Decline in Treasury bond yields indicates demand for USD-denominated assets rises. Treasury Secretary Timothy Geithner reiterated his confidence on demand for the record supply of US' debts. However, we remain bearish about USD's outlook. However, we believe over the medium- to long- term, demand for Treasury and price movement of USD remain gloomy.

Although last week's Treasury auction was successful, it does not mean it can sustain in the long term. In fact, Treasury supply is a continuous process and it's unlikely for market to absorb all the supplies in the coming future. The situation will be hazardous to both Treasury price and USD.

Gold price consolidates below yesterday's close, so does silver as both metals are technically in overbought territories. Platinum price remains firm with July futures trading at 1221 in European session. Investors shrugged off GM's bankruptcy news and instead looked beyond to anticipate that auto market in the US will recover in longer term.