28.07.2014 - Fundamentals are driving commodity markets
Commodities performance in Q2 and in the beginning of Q3 has been a mixed bag. We have the grains and oilseeds plunging into a bear market, rallies in the softs and better returns in energy and precious metals. These commodity asset classes are re-aligning and being driven by their own fundamentals rather than broad macro-economic drivers. A whole range of factors, especially from the supply side including weather, export bans, unplanned outages and geopolitical risk, are starting to have more influence on commodity prices than announcements from the Fed. The first half of 2014 has also seen a decline in the correlation between commodities and other asset classes. With the current environment of high bond issuance, tight credit spreads and record low volatility in these other asset classes, the higher volatility in different commodity markets is inducing investors to re-look commodities again...............................................Full Article: Source
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