Thursday, March 11, 2021

Commodity Prices In Other Currencies

Yes, commodity prices are zooming, the Dow Jones Commodity Index is near a  10 year high - in US dollar terms (Chart 1).  But, what if you are paying in Euro, Yen or Aussie Dollars?

Chart 1 - Commodity Price Index in US Dollars

In euro, commodity prices are already past their 10 year high - Chart 2.

Chart 2 - Commodity Price Index in EUR

If you are paying Yen, commodities are even more expensive - Chart 3.

Chart 3 - Commodity Price Index in JPY

And what if you are a producer of commodities, say Australia?  You are very pleased, indeed - Chart 4.

Chart 4 - Commodity Price Index in AUD

Finally, here is a  comparison chart of the Commodity Index in USD (blue mountain) with the 10-year Treasury bond yield (red line) - Chart 5.

Chart 5 - Commodity Price Index in USD and 10-Year Treasury Yield

It looks to me that interest rates have a long way to go higher before they catch up to commodities.  That, or commodity prices will come crashing down because the current hyper-optimistic global economic growth expectations are proven false.

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