Commodities are and will continue to be the place to be over the coming months. Often it pays to keep things simple – it doesn’t take a rocket scientist to work out that this chart (for whatever reason) is looking very bullish. Commodities are now outperforming US Treasuries (not at all surprising) and Investment Grade Corporate Bonds (surprising). Is the outperformance of commodities just a fleeting thing…….will this outperformance fall over? We think not. Fundamental reasons aside (the Fed printing cash like you can’t believe and improving global growth expectations), generally when you see outperformance of an asset class relative to another over a three month period (like we currently have) it suggests that there is a “fundamental” change in the market and a change in primary trend. Primary trends from a macro perspective last for months/years at time. Accordingly we feel that commodities are the place to be at least until year end and quite probably well into 2010.
