The runaway lumber train

Price up by over 50% in the past month

Chart of the Day

It was another strong day for lumber, which is now up by 54.3% in the past month. The price has surged due to the quicker rebound in demand than supply, which is still being affected by disruptions from the pandemic. Futures markets imply prices will decline over the rest of the year but remain high versus the long-run norm. The price increase since Covid struck is apparently now adding almost $40k to the price of a new home, a huge proportion given the average price is about $300k.

Macro

The US ISM manufacturing index fell to 60.7 in April, but that still left it consistent with industrial production growth of around 4% YoY.

The prices paid component of the manufacturing ISM rose again.

Strong residential construction is more than making up for weak commercial construction.

Markets

Ethereum is soaring again, up by almost 20% yesterday - though the price had dropped back at the time of writing.

It was generally a strong day for the precious metals yesterday. Moves the past week have ranged from a fall of 1.2% for platinum to a rise of 2.8% for palladium, which is now the top performer since 2020.

Precious metals prices have been helped by the modest decline in real yields (inverse on this chart).

The Baltic Dry Index has risen by 8.7% in the past week and is now up by 47.3% in the past month.

Some people think that the strength of cryptos is causing outflows from the EV market.

The Dow Jones Transportation Average outperformed the S&P 500 yesterday, with a rise of 1.8%. It has well outperformed so far this year, normally a good sign for the economy.

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