CQG News | Q2 2022 in Commodities
Summary
Liquidity and stimulus have increased the money supply and government deficits to staggering levels, which creates an inflationary and bullish landscape for raw material prices. Expect lots of volatility to continue in the energy and food sectors as fighting inflation with monetary policy cannot address the shortages created by the war in Europe’s breadbasket. Liquidity will likely decline over the summer months, leading to even more price variance as bids or offers evaporate when markets move lower or higher. The bullish commodities relay race mostly paused at the end of Q2 after many asset class members rose to a new record or multi-year high prices and retreated. The bifurcation between nuclear powers creates a dangerous geopolitical landscape, and Russia’s invasion of Ukraine could set the stage for Chinese reunification with Taiwan later this year or in 2023.
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