Biggest Commodity Comeback Ever

by: S&P Dow Jones Indices

By Jodie Gunzberg

St. Patrick's Day didn't just have a pot of gold at the end of the rainbow, but had basically the whole commodity basket. The S&P GSCI that represents the world's most significant commodities ended March 17 with a positive total return year-to-date for the first time in 2016, up 1.9%.

Source: S&P Dow Jones Indices.

Source: S&P Dow Jones Indices

The index reached its highest level since December 10, 2015, and gained 18.8% since its bottom on January 20, 2016. This is the most the index has ever increased in just 40 days after bottoms.

Source: S&P Dow Jones Indices

Source: S&P Dow Jones Indices

Further, now in March, 23 of 24 commodities are positive. This is the most ever in a month, with one exception, when all 24 commodities were positive in December 2010. It is also the fastest so many monthly returns of commodities changed from negative to positive, making a comeback from November 2015, when just two commodities were positive.

Source: S&P Dow Jones Indices.

Source: S&P Dow Jones Indices

Now, only aluminum is negative in March, down 3.1%. However, its roll yield recently turned positive, which shows more scarcity (that is very rare for aluminum), indicating it may turn with the rest of the metals. Especially if the U.S. dollar weakens, the industrial metals tend to benefit most of all commodities. That says a lot about their economic sensitivity, given all commodities rise with a weak dollar.

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