Bloomberg
Nowhere to hide from fear of inflation if commodities join Rout
(Bloomberg) – Even futures contracts are not safe for the inflation fears that are gripping world markets. Crude oil fell 7%, while coffee had the biggest loss in two months, while maize and copper also tumbled. Fearful concerns that the Federal Reserve will accelerate inflation caused a sell-off in most risk assets on Thursday. U.S. stocks fell from records and treasury yields jumped. These movements spilled over to commodities, with a physical demand strongly linked to global growth expectations, but it was a bit of a paradox for commodities. Sometimes the markets can benefit from an inflationary environment, as investors view the commodities as a good place to find returns. But the inflation equation just has to be right: too much, especially if it is accompanied by concerns about economic growth and a higher dollar, and the rise in inflation is rapidly turning into a low point amid pending demand expectations. a rough rise rose by more than 30% until Wednesday. Maize, soybeans and copper reached perennial highs and timber prices soared. Bulls gave such an order that some dealers got ready for a new superbike of long-term profits. It’s a home for yields This enthusiasm came to a halt this week as the prolonged explosion of vaccines raises concerns about how long it will take before energy, metals and grains’ consumption return to pre-pandemic levels. This is exacerbated by the rise in the dollar, which makes the price of green prices less attractive than a surge in value. “Treasury yields and the dollar are responding to the Fed, and it is currently having a negative impact on commodities,” Arlan Suderman said. , chief economist at StoneX, said in an email that the Bloomberg Commodity Spot Index had fallen 2.4%, the biggest drop since mid-September. West Texas Intermediate crude futures fell for a fifth session, the longest stretch of daily losses in more than a year. Global demand for oil will not return to pre-pandemic levels until 2023, and growth will then be curbed amid new work habits and a shift in fossil fuels, the International Energy Agency said this week. Grain prices also fell. There are signs of improved growth conditions for some crop producers. Favorable rains for soybeans in Argentina weighed on the market, while favorable weather in the US, Russia and Ukraine put wheat prices under pressure. Meanwhile, the gain for the treasury returns has hurt the demand for alternative assets such as gold and silver, which do not bear interest. more articles like this, feel free to visit us at Bloomberg.com. Sign up now to stay ahead of the most trusted business news source. © 2021 Bloomberg LP