Rising commodity prices and a reminder of the 1970s

Commodity prices rose across the board on Thursday, with oil surging up roughly 5 percent to more than $120 a barrel. No single fact seems to have caused Thursday’s broad rise - economic data recently released were, if anything, bearish - although many have pointed to a 1 percent drop in the value of the US dollar. As the trading logic goes, if one does not trust the dollar, one can always sell it to purchase “stuff” such as nickel, copper, oil and what not. The logic holds doubly if one expects the dollar to get weaker still.

Regardless of the reason for the commodity price increases, they most certainly have happened - and happened in force.