Friday, May 16, 2008


inflation expectations have increased to a two-month high, as measured by the Treasury's inflation-protected securities. feeding into the increase in inflation expectations is undoubtedly the recent pattern in global shipping rates, which tend to correlate well with commodities prices.

the baltic dry index is of course a top gauge of shipping rates and is widely followed in the financial markets. on thursday, the bdi reached an all-time high of 11,067, representing a near doubling of the index since it bottomed on 1/29 at 5,615. the previous peak was at 11,039 set last 11/13. the recent surge has seen the bdi increase 3,000 points in just under a month, coincident with a renewed surge in commodity prices.

the bdi, according to the baltic exchange, provides "an assessment of the price of moving the major raw materials by seas. taking in 24 key shipping routes measured on a time charter and voyage basis, the index covers supramax, panamax and capsize dry bulk carriers," that carry a wide range of commodities. the index therefore provides useful information on the pace of economic growth.

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