Speculators cut bets on rising commodities prices by the most in 19 months as raw materials tip into their first bear market since 2008 and investors anticipate more losses. Money managers cut the combined net-long position across 18 futures and options by 20 percent in the week ended Sept. 20, the most since February 2010, data from the U.S. Commodity Futures Trading Commission show. The Standard & Poor’s GSCI commodity gauge ended last week down 21 percent from the almost three-year high in April, the common definition of a bear market. The last time the index fell that much was in 2008, when the global economy sank into its worst slump since World War II.
Almost $3.6 trillion was wiped off the value of global equities last week as investors sought the relative safety of Treasurys, sending yields on 10-year notes to a record low.
“The fear is that this is 2008 all over again, only worse, because this time around we won’t have the government for a backstop,” said Jeff McReynolds, owner of McReynolds Marketing and Investments, a commodities broker in Hays, Kan. “If the whole world slides back into recession, obviously that means less consumption. But it’s more than that, because it’s all about fear. It’s sell everything. It’s marketwide. It’s commoditywide. It’s broad-based, go to cash.”
— Bloomberg
