Commodities took a sharp turn lower in the first week of May, beginning with a silver price collapse from US$50/oz back below US$35/oz – a move in excess of 30%, driven by higher margin requirements and a spectacular unwind of speculative longs. Seeing this, BMI’s Commodities Team focused its attention on Brent crude, upon which… [Read more]
Recent price action has bolstered my view that recent weakness in commodity markets is part of a temporary correction, rather than the start of a trend change. Commodities are bouncing across the board today, in line with a general recovery across asset classes. For instance, the Dow has held the key 11,000 level, while the… [Read more]
Industrial commodities such as energy and base metals are highly correlated to risk appetite and hence equity markets. Below I highlight the monthly rolling correlation between Brent crude and the Dow Jones. The two main things to note are that first, on a monthly basis, the correlation stands at 0.9 (which implies a strong and… [Read more]
The downward revision to China’s leading economic index has weighed significantly on equity and commodity markets this morning. The conference board claimed that the index rose by only 0.3% in April, marking a significant downward revision from the 1.7% released earlier this month. This ties in well with several of Business Monitor’s views; a relatively… [Read more]
Recent developments in global markets have largely reaffirmed BMI’s pre-existing key views on the eurozone (it looks bad), deflation and inflation (it’s deflation), and the outlook for growth in the second half of 2010 (our expectation for a slowdown is looking better and better). Mark Schaltuper is joined by Tim Cooper, BMI’s Chief Economist, to… [Read more]
Commodity markets have traded sideways in recent weeks, despite global equity markets edging higher. This is concerning given that the two asset classes have been very well correlated in recent months. The key driver of this divergence, in our view, is a resilient US dollar. Greenback strength tends to weigh particularly heavily on commodity markets,… [Read more]
In this week’s podcast Mark Schaltuper (Head of Latin America Analysis) and Terry Alexander (Head of Country Risk and Financial Markets) discuss the return of risk appetite to global markets. Assessing recent moves and a stronger-than-expected bounce in developed markets’ equities, we explore potential opportunities and the implications for emerging markets.
