Commodity prices set for 'best year since 1915': Report

A flurry of factors, such as the pandemic, lockdowns, civil unrest, war, excess monetary and fiscal stimulus and broken supply chains have resulted in epic inflation, BofA analysts said

Commodity prices are on track for their biggest increase in over a century while fixed income assets saw the longest streak of outflows since the global financial as the war in Ukraine exacerbates the inflationary pressures resulting from the world economy springing out of lockdown, BofA wrote on Friday.

“Commodity prices on course for best year since 1915,” the investment bank's analysts led by Michael Hartnett said in a weekly note, naming a flurry of factors, such as the pandemic, lockdowns, civil unrest, war, excess monetary and fiscal stimulus and broken supply chains as having resulted in “epic” inflation.

By the same token, the bank said government bonds were set for their worst year since 1949 with “negatively-yielding bonds quietly vanishing” from the market as central banks embark on a monetary tightening cycle and raise interest rates to tame surging inflation.

Based on the EPFR data, BofA said weekly flows of capital to funds saw $13.2 billion go into cash, $2.1 billion to gold, $0.2 billion out of bonds and $1.9 billion from stocks. In notable flows, bonds saw 11 consecutive weeks of outflows, the biggest streak since the fourth quarter of 2008.
 

LME to nearly double default fund after nickel squeeze
 

The London Metal Exchange told members it will nearly double the size of its clearinghouse default fund as the exchange grapples with the fallout from an unprecedented short squeeze that roiled metals markets this month.

The default fund is expected to increase to $2.075 billion from $1.1 billion in April as a result of the exchange’s monthly stress-testing exercise, an LME spokesperson said. The move comes after a record spike in nickel prices and wild swings in recent sessions that that have put the metal on course for a 49 per cent monthly gain, the biggest increase since 1988.