February 2017

Released March, 2017

The Bloomberg Commodity Index, flat in 2017 on a total return basis and up 2.4% spot can be considered reflationary due to strong metals, but may have negative economic implications if precious continue to outperform. Precious metals, due to snap back from 4Q weakness, are up 10.5% in 2017 vs. 9.9% for industrial metals. Some reversion of position and price extremes is at play, notably in energy, down about 10.1%. Excessive optimism for further energy-price gains accompanied by record open interest and managed-money net positions has limited appreciation. Energy is likely to be BCOM's prominent driver in March, as extremely low volatility is due for some mean reversion. Grains led agriculture higher, but March is typically a bad month. Similar to crude oil, the dollar is also ripe for movement in March, which may set the tone for 1H.

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