Financial markets continue to tell us that the “inflation trade” remains strong. There has been no breakdown in the leading indicators of inflation, which transpires to leading indicators of commodity prices. Inflation protected treasuries remain in an uptrend against non inflation protected treasuries both in the US and internationally. Growth indicators such as emerging markets vs. developed equity markets and coal stocks vs. the broad market continue to suggest that growth is likely to surprise to the upside. Finally commodity currencies continue to advance against both the USD and the Euro. So without even looking at commodity charts we are able to deduce that commodity prices are more likely to rise than fall over the coming weeks. The only real drag on commodity prices so far has been the behavior of the food group not the base metals group which has been a much better indicator of inflation and world growth in the past.
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[...] Indicators Suggest Commodities will continue to rise [...]