The most important developments this past week were a market-perceived delay in the timing of the next US rate hike, another failed rally in the dollar, and upside breakouts in gold and silver off the latest wave of US/Chinese trade war fears.
Corn
Plenty of Positives for Physical Commodities
Just when it appeared that the reflation play was being reversed, the new US Administration managed to return its focus to pro-growth policy initiatives.
Surprising Global Economic Outlook Improvement
The outlook for China seems to have improved enough for them to raise short-term interest rates. In the wake of this general progression, growth-sensitive industrial commodities like crude oil and copper have already benefited.
Economic, Political Uncertainty On the Rise; Forward Commodity Demand in Question
US economic data continues to be disappointing, Trump and the GOP are trying to do everything at once, and they appear to be putting off tackling fiscal spending and tax reform in favor of wading into the quagmire of health care reform.
Disappointing US Data Heading into 2017
US data over the last several weeks have been disappointing, especially when one considers that the economy should have benefited from the holiday season.
Outlook for the Global Economy and Commodity Markets Continues to Improve
The outlook for the global economy and commodity markets in general continues to improve, but some might fret over the looming FOMC rate decision, while others might be concerned over the prospect of a firming dollar in the event the Fed does make a move to hike rates.
Shift in Economic Sentiment From the US
While the hype and equity market euphoria from the election has started to moderate, a shift in economic sentiment from inside and outside the US was already in motion, and that could allow for a “risk on” vibe until the markets get closer to the mid-December FOMC meeting.
The Markets Force the Fed to Act
We were a little surprised with the trading action over the last week.
The Fed Looks to Remain On Hold Through December
While the markets might not believe that the oil producers’ deal to reduce output will be fulfilled, it does appear that US crude oil inventories are tightening and global demand is creeping higher.
Deflation Threats Linger; Fear of a Rate Hike
To hike, or not to hike, that is the question!