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📑 Research Notes for 2021-01-11
This week, we look at a record low in inflation-adjusted yields, and the rising costs of food and lumber.
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A New Low in the War on Savers.
The real yield on the U.S. 10-year Treasury note fell to its lowest level on record Monday, declining to -1.11%, meaning that, after accounting for expected inflation, holding a 10-year U.S. Treasury bond to maturity will mean losing more than 1%.
Global Food Prices at Six-Year High Are Set to Keep On Climbing.
Global food prices reached a six-year high in December and are likely to keep rising into 2021, adding to pressure on household budgets while hunger surges around the world. A United Nations gauge of food prices has jumped 18% since May, as adverse weather, government measures to safeguard supplies and robust demand helped fuel rallies across agricultural commodities from grains to palm oil. Prices will likely climb further, the UN’s Food & Agriculture Organization said.
Framing Lumber Prices More Than Double Year-over-Year.
(All Star Charts)
This graph shows CME framing futures through Jan 4th up 115% year-over-year - more than double. Seasonally, lumber prices will increase in the Spring, and peak around May, and then bottom around October or November - although there is quite a bit of variability. Even accounting for seasonality, there is clearly a surge in the demand for lumber.
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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