Many commodity markets appear to be vulnerable to corrective action, despite the fact that the dollar is showing signs of weakening and providing support from an export perspective. Favorable weather, a historically strong start…
With US scheduled data into the end of March/end of quarter coming in positive and the trade facing the March nonfarm payroll report at the end of this week, it is possible that US economic expectations will be improved and markets like Treasuries, equities, copper, silver, platinum and palladium will resume the trends in place from the end of February. However, physical commodities…
The most important developments of last week were 1) indications that world oil producers were poised to extend production cuts (or even expand them if it becomes necessary to reduce global oil stocks to five year average levels) and 2) percolating fears of bird flu in Asia.
We are not sure if the signals being thrown by Treasuries this week are a sign of a longer term change or if we are “putting the cart before the horse.”
The “talking heads” and “talking fund managers” are suggesting that the rally in commodities is done, unjustified and poised to be reversed.
Just when it appeared that the commodity markets were overbought and poised to correct, the US Fed was found to be on-hold “to at least June.”
Just when it appeared that commodities were settling back on a deflationary track, leadership surfaced in fresh buying interest in gold, silver, platinum, soybeans, corn and crude oil.
With the Fed taking a pass on hiking rates in September, a reduction in their 2016 and 2017 growth forecasts, and only minimal dissension within their ranks against a steady policy stance, it appears that they are not confident enough in the pace of US growth to make a move at this time.
We won’t suggest that the recent lows in many commodities are solid, but value-hunt buying of copper assets by Carl Icahn, a $4.00 single-day rise in crude oil prices, and a 1,000-point, 2-day bounce in the Dow suggest that sentiment was overdone on a number of fronts.