The Commodities Channel

Quarterly Letter

Despite another interest rate hike in June by the Federal Reserve that raised the target federal funds range to 1.75-2.00%, along with plenty of increased tariff talk and (some) implementation by the Trump administration, the investment world was relatively calm in the second quarter of 2018.

Charts for the beach - 2018

Don’t leave home without your summer essentials: sunglasses, sunscreen, towel and RBA’s Charts for the beach.

June Trade Deficit at $46.35B

The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -43.10B was better than the forecast of -46.35B.

Markit Manufacturing PMI: Growth Dips in July

The July US Manufacturing Purchasing Managers' Index conducted by Markit came in at 55.3, down from the 55.4 final June figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.

ISM Manufacturing Index: PMI Down in July

Today the Institute for Supply Management published its monthly Manufacturing Report for July. The latest headline Purchasing Managers Index (PMI) was 58.1 percent, a decrease of 2.1 percent from 60.2 the previous month. Today's headline number was below the forecast of 59.4 percent.

Treasury Yields: A Long-Term Perspective

The last couple of years have been remarkable ones for yields. The 10-year note hit its historic closing low of 1.37% in July of 2016 and then rose 158 BPs to its interim high of 2.96% as of the July 31 close.

The Big Four Economic Indicators: Real Personal Income in June

Personal Income (excluding Transfer Receipts) in June rose 0.44% and is up 5.0% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was at 0.34%. The real number is up 2.7% year-over-year. Extensive revisions and updates were made.

Investment Humility and Economic Recovery

We make every effort to understand the way that investors go to extremes over what we call the “well-known fact” in the stock market. A “well-known fact” is a body of economic information which is known to virtually everyone in the marketplace and has been acted on by anyone with capital.

Home Prices Rise Remain Steady in May

With today's release of the May S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.21% month over month. The seasonally adjusted national index year-over-year change has hovered between 4.2% and 6.7% for the last two-plus years. Today's S&P/Case-Shiller National Home Price Index (nominal) reached another new high.

Chicago PMI at Six-Month High

The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose in July to a six-month high of 65.5 from 64.1 in June, which was above the forecast of 61.9. Values above 50.0 indicate expanding manufacturing activity.

2018 3Q Economic Capital Market Outlook

The domestic economy is functioning as well as any period since 2007, however we expect economic growth to slow next year. Measured by GDP, we expect the economy grew by a solid 4.0% in the second quarter and is growing at a rate of 2.7% with most sectors performing well.

Weekly Gasoline Price Update: Regular Up 15% in 2018

It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular was up two pennies and Premium was up one from last week. Regular is up 15% in 2018. According to, Hawaii has the highest average price for Regular at $3.75 and San Francisco, CA is the most expensive city, averaging $3.74. Alabama has the cheapest at $2.54. The WTIC end of day spot price closed at 70.13, a 3.3% increase from this time last week.

The Long Runway for Infrastructure Spending

Infrastructure is not a glamorous topic — it isn’t satirized on late-night TV, nor is it trending on social media. But the need for increased infrastructure investment is real across the globe. Given expected demographic trends, disruption by new technology and insufficient spending in the past, we at Invesco Real Estate believe infrastructure-related companies could be poised for decades of growth.

Bitcoin Miners See a Bullish Breakout on the Horizon

The price of bitcoin surged above $8,000 on Tuesday for the first time since May after the Group of 20 (G20) meeting in Argentina concluded last weekend with little urgency to take regulatory action on cryptocurrencies. In a communiqué, finance ministers and central bank governors expressed confidence that the technology underlying alt-coins “can deliver significant benefits to the financial system and the broader economy.”

Gold Outlook Brightens

Ultimately, we think the sell-off will prove transient and that the relationship of real yields to gold observed over the past decade will prevail.