Recently, the international oil prices started to move, back on more than a year high, can be considered an important indicator of the overall commodity market. With the United States to implement a new round of economic stimulus package, bringing the vision of economic recovery, coupled with the global shortage of chips and containers, triggering supply tensions and rising costs, and do not underestimate the pressure of rising prices in the year. The most fear is that the economic performance can not keep up, so that the risk of stagflation heated up.
Commodities such as iron ore and soybean prices have risen in recent quarters, to see London Brent Crude Oil futures rose through the $ 60 per barrel mark on Monday, returning to a high in January last year. The cause of the matter in recent years, the oil-producing countries to stabilize oil prices, a significant reduction in production, until the beginning of this year, many places around the world vaccination, the oil price demand side only to see improvement. The problem is that the Epidemic lasted for more than a year, many production facilities have been shut down for a period of Time, when the economy began to get back on track, the supply may not be able to catch up with demand changes, coinciding with the recent global shortage of chips and shortage of containers, so that production costs rise and time to extend, more so that the supply side added variables.
On the other hand, the new U.S. government is prepared to open the water hose to save the economy, is bound to further intensify the asset bubble. The stock market has been the first, the U.S. stock market strength need not be said. Some hedge funds have begun to expand the scope of investment to speculate in commodity futures, when the medium-term oil prices in addition to benefiting from improved demand prospects, in the global environmental awareness to enhance the investment climate are shifting to renewable energy, oil companies to obtain financing to support increased production is not easy, that the short-term supply side failed to change with demand and a breakthrough, is one of the reasons why lobbyists turn to battle futures oil.
Recently, U.S. stocks rose, but the U.S. bonds were sold off, long-term Treasury yields rose sharply, the yield curve steepened, seems to indicate that the market worries about Inflation and fiscal deficit increased. It is important to know that the rise in Treasury yields and the sharp increase in the cost of the manufacturing supply chain can be seen as a wind vane for inflation to warm up.
Although the Federal Reserve has repeatedly stressed that it will implement quantitative easing, tolerate inflation above 2% until full employment drives wages back up. But I believe that the new government after the honeymoon period, the market will feel the challenges of its administration, the road to economic recovery is by no means a straight path. The most worrying thing is that economic growth cannot catch up, and commodity prices continue to rise driven by various factors, which will trigger the risk of stagflation, and major central banks will then enter the nightmare!
In this context, the People’s Bank of China did not inject liquidity into the market before the New Year as in previous years, but rather pumped water from the market, not by chance, the action reflects to some extent the authorities are concerned about price factors, adhere to strict control of property speculation, to prevent asset bubbles white-hot. After all, asset prices and the pace of economic development for a long time inconsistent, such as walking on the left and right legs are not coordinated, the consequences are sooner or later to fall.
All in all, investors and do not just indulge in the current asset bubble, but also to realize that the market is recovering from the period into the asset overheating, the future does not rule out a period of wallet can not catch up with the price of “stagflation” period. Global monetary policy from loose to tighten the pressure of increasing, ultra-easy policy once reversed, its lethality should not be underestimated!
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