Even commodity futures are not safe from fears of inflation affecting global markets. Crude fell 7%, coffee had the biggest loss in two months, while corn and copper also fell.
The new concern that the Federal Reserve will let inflation accelerate caused an increase sales of most risky assets on Thursday. U.S. equities fell from Treasury records and yields. These movements spread to commodities, with physical demand closely tied to global growth expectations.
Still, it was a bit of a paradox for commodities. Sometimes markets can benefit from an inflationary environment, as investors think commodities are a good place to find them. performance. But the inflation equation must be right: too much, especially if it is linked to concerns about economic growth and a rising dollar, and rising inflation is quickly becoming a drag in the midst of expectations of demand deflated.
Commodities had one it started with an overburdened year that saw crude rise more than 30% until Wednesday. Corn, soybeans and copper were reached multi-year highs and wood prices soared. The oxen adopted such an order that some traders were preparing for a new supercycle of prolonged gains.
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That excitement has stalled this week as the slow deployment of vaccines raised concerns about the time that will pass before energy, metals and cereals consumption return to pre-pandemic levels. This was exacerbated by dollar gains, which make green dollar-priced commodities less attractive as a reserve of value.
“Treasury and dollar yields are responsive to the Fed, and currently this has a negative impact on commodities,” said Arlan Suderman, chief economist at StoneX Commodities.
The Bloomberg Commodity Spot index fell 2.4%, the biggest drop since mid-September.
West Texas crude oil futures declined by a fifth session, the longest stretch of daily losses in more than a year. World oil demand will not return to pre-pandemic levels until 2023, after which growth will slow amid new work habits and a shift away from fossil fuels, the International Energy Agency said this week.
Grain prices also fell. There are signs of improvement in the growing conditions of some crop producers. Beneficial rains for soybeans in Argentina weighed on the market, while favorable weather in the United States, Russia and Ukraine put pressure on wheat prices.
Meanwhile, Treasury yield gains affect demand for alternative assets such as gold and silver, which have no interest.