October 2017

Early Days for Commodities May be Late for Stocks (Bloomberg Intelligence) -- It may finally be time for inflation and higher bond yields, as recovering commodities join primary inflationary forces, including a very low and still-declining unemployment rate and potential peak dollar. The Bloomberg Commodity Spot Index is up 7% in 2H, with spot industrial metals doubling the record-setting stock-market performance in the current rate-hike cycle. With room to run, commodities may take the performance baton from stocks. Commodities have a history of outperforming stocks in declining-dollar environments. Within an unprecedented compressed range the past 12 months, the Bloomberg Commodity Index may be just recovering amid favorable demand vs. supply. Record-low stock-market volatility could portend the opposite.