Chart of the Day

Commodity prices are soaring, especially the agricultural ones and lumber which were all up by over 3% yesterday. In the past month alone, lumber is up by 50% and wheat and corn by over 20%. All this is a further sign that inflation is set to rise this year.

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Macro

The German Ifo survey expectations component fell to 99.5 in April, leaving it consistent with GDP growth of 2% YoY.

US durable goods orders rose by 0.5% MoM in March. Excluding transport, orders increased by 1.6% MoM and are now up strongly since the pandemic.

In Brazil, growth in foreign direct investment remains sharply negative.

Markets

Agricultural prices have gone near vertical in the past week.

Copper has also broken through its prior high.

Higher commodity demand and prices mean higher freight rates - the Baltic Dry Index has risen by 15.5% in the past week and is now up by 28.9% in the past month.

The copper/gold ratio would normally be consistent with a higher 10-year bond yield, but bond yields have in reality been dropping back.

The strong moves for commodities have helped push up the commodity currencies against the USD, whereas the Turkish lira has weakened further as it faces more pressure on its current account.

Strong commodity prices have not been as supportive of equity markets though, with Australia’s still down over the past week, much like Canada’s.

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