By Tom Burnett CFA
According to the June 7 edition of WSJ.com, the commodities group is by far the best performing asset class of the 2022 year. The Bloomberg Commodity Index is up 37.5% this year, led by the energy and food sectors. Natural Gas has risen an astonishing 149.9% and gasoline is up 88.2%. Wheat is now up 41.8% this year. Stocks and bonds have been punished and the leading Indexes are all down for the year.
The S/P 500 Index is now down 13.5% while the NASDAQ Composite is off by 22.9%. Fixed income investors have also suffered negative performance this year. The Municipals Index is down 7.4% while the High Yield Index is showing a performance of negative 10.3%. Investment Grade bonds have done even worse—that index is down 15.2%. Overseas bond investors have also suffered. The overall International Bond Index is down 9.6% while the Index of Emerging Markets bonds is off by 17.7%. The worst performing fixed income asset class is the 20+Year Treasury Bond Index, now down 23.1% this year. With inflation raging at a 40-year high and the Federal Reserve committed to raising short-term rates, further damage to the fixed income sector cannot be ruled out. Energy prices face upward pressures from the Russian invasion of Ukraine which does not appear to be ending in the near future. These energy price pressures will likely continue to stoke inflation readings which will add to the underperformance of the fixed income sector.
Tom Burnett CFA is Director of Research