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Belly-Led Cheapening In Wake Of Retail Sales

AUSSIE 10-YEAR TECHS

(Z1) Turning More Neutral

ECB

ECB Plays Down FT Story

AUSSIE 3-YEAR TECHS

(Z1) Incline Accelerates

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  • Natural gas prices have more than doubled this year, caught in their storm of 'lower supply and rising demand', which will result in larger heating bills for consumers this winter.
  • The front month futures contract (Henry Hub) broke above the $5 level for the first time since 2014, and the momentum could continue in the coming months as demand continues to rise as we approach the winter period.
  • In addition, investors have historically viewed energy commodities (i.e. oil, nat gas) as the best 'inflation hedges' when inflationary pressures start to rise.
  • This chart shows the average monthly performance of 10 of the most traded commodities since 1980 (Times series start in 1983 for oil, 1989 for copper and 1990 for Nat gas) when inflation is accelerating (i.e. 1Y change in CPI inflation is positive).
  • Are commodity investors pricing in further inflationary pressures going forward?

Source: Bloomberg/MNI