Free Trial
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
COMMODITIES
- As market-implied measures of inflation expectations continue to increase, the probability that inflationary pressures persist longer expected has been rising in recent weeks.
- Hence, commodities, which have been perceived as powerful inflation-hedge over time, are expected to continue to perform well in the current environment.
- With US CPI inflation soaring above 2-percent in March (2.6% YoY), we look at the average monthly performance of each of the 7 sub-indexes of the Bloomberg Commodity Index (BCOM) when US CPI inflation stands above 2 percent since January 1991 (the inception of some of the sub indexes). See chart below.
- Surprisingly, the BCOM Energy Sub index is by far the best performer, averaging 0.3% in monthly return when inflation rises above 2 percent, while Softs, Grains and Ags are the worst performers (averaging -0.36%, -0.35% and -0.32%, respectively).
- Hence, if inflation remains high (>2%) in the coming months, oil (energy) should still continue to perform well based on that historical relationship.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok