Has the Baltic Dry Index (BDI) lost its 6 year correlation to commodities and inflation expectations?
It would appear so, the Baltic Dry Index (weekly, linear scale chart) is in full deflationary tank mode approaching its lows of the last several years.
But the BDI has not led RINF (inflation expectations ETF) or the commodity complex (CRB index) that RINF so reliably tracks, downward yet. So again, has BDI lost its correlation or is it just well out ahead of the process? Rational market managing minds want to know.
I think it is notable that the Baltic Dry Index got a hysterical head start to the upside in H1, 2020, topped well ahead of CRB and RINF, and is hysterical to the downside in 2023.
Then again, maybe it’s just a broken correlation as commodity/inflation bulls would like to believe. But I would not bet on it.
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