June 2018

<strong>Broad Commodities Gaining Support, Showing Divergent Strength</strong> (Bloomberg Intelligence) -- In the wider scheme of investing and market performance, the 2018 commodity recovery to May 31 is a rounding error -- it promises to gain significance. Primary rally risks include a sharp plunge in crude oil, a very good U.S. corn-belt growing season, sustained U.S. dollar strength and a sharp decline in the stock market. The greenback bounce should be almost complete, with a likely peak in U.S. Treasury bond yields. Despite the dollar's recovery, commodities have shown divergent strength. Stocks are overdue for an extended period of underperformance, but a severe reversal is unlikely with strong underlying economic growth and increasing inflation -- commodity and bond yield positives. Commodities with historically elevated explosion risks include grains, precious metals (gold, silver and platinum) and natural gas.