Not surprisingly, the US Fed moved to hike interest rates last week, but the markets were somewhat surprised by the hint of three possible rate hikes in 2017.
The shocking election results on Tuesday caused a harsh, knee-jerk reaction in many financial and commodity markets.
Looking at a weekly or daily chart of the Goldman Sachs Commodity Index (GSCI), commodity prices seem expensive.
Since the March lows, several physical commodities have forged rallies that few expected, and with even fewer anticipating the magnitude of those rallies.
Gradually the skies are brightening for a host of physical commodities, but various headwinds remain in place into the sixth month of 2016.
The markets have now “reflated” and have partially corrected!
This is a sample entry from Tom Dosdall’s newsletter, Technical Ag Knowledge, published on Monday May 23, 2016. **Crop progress numbers will be released today @ 3PM (CST).** Ag Markets Jul ’16 Corn Corn is starting to look a little tired here at the top of the range and may need some fresh fundamental news… Read more.
The “talking heads” and “talking fund managers” are suggesting that the rally in commodities is done, unjustified and poised to be reversed.
The recent retrenchment in bean oil, crude oil, sugar, corn, equities, cattle, gold, platinum, palladium and copper as well as significant rallies in Treasuries and the Japanese yen mostly started around March 14th, and some have labeled the period since mid-March as a “crisis.”
Several weeks ago we spoke of a brightening of economic skies, but in this publication, we have to note some short-term vulnerability potential in markets that are overbought and/or markets that might be overly sensitive to a shift by the Fed back toward a more hawkish stance at upcoming FOMC meetings.