KEJI - Overbuilding And Leverage Suggest Deflationary Forces Still Dominate

• After rising 90% from its March 2020 low, the Bloomberg Commodity Spot Index which tracks 23 energy, metals and crop futures contracts, yesterday surpassed its previous all-time (fleeting) highs touched in 2011 and 2008.
• Chinese credit impulse has been contracting since last spring and typically leads global commodity prices with a lag of 12 months.
• The deflating world economic surprise index (below in blue) suggests the run-up in rates (US 10 year yield in red) should be short-lived.

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