Investors are boosting wagers on higher commodity prices at the fastest pace in almost four years, rebounding from the least bullish position since 2009, on signs that the U.S. is accelerating and Europe’s debt crisis is easing.
Hedge funds and other large speculators increased net-long positions across 18 U.S. futures and options by 10% to 679,191 contracts in the week ended March 26, data from the Commodity Futures Trading Commission show. The bets surged 67% in three weeks, the biggest advance since May 2009. Wagers on higher oil prices climbed the most this year, while those for cattle are at a six-week high.
The Standard & Poor’s GSCI Spot Index of 24 raw materials has rebounded 2% from a 10-week low on March 4 as contracts outstanding jumped 10% last quarter, the most in a year. The U.S. economy grew at a faster pace than previously estimated in the fourth quarter, the Commerce Department said March 28. Cypriot President Nicos Anastasiades vowed to keep his nation in the euro on March 29 after it became the fifth country to seek a rescue since the region’s crisis began in 2009.
“Over the last quarter, we’ve seen an improvement in U.S. economic activity far above expectations,” said Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $130 billion of assets. “That has ginned up demand expectations.”
The S&P GSCI gauge gained 1.3% last quarter. The MSCI All-Country World Index of equities climbed 6%, while the dollar advanced 4% against a basket of six trading partners. Treasuries lost 0.3%, a Bank of America Corp. index shows. The CFTC holdings reached a four-year low in the first week of March and are still about 24% below the average over the past five years.
U.S. gross domestic product rose at a 0.4% annual rate in the fourth quarter, up from a prior estimate of 0.1%, government data show. American household purchases, which account for about 70% of the economy, gained 0.7% in February after a 0.4% advance the prior month that was bigger than previously estimated, the Commerce Department said. The nation is the biggest consumer of corn and crude oil.
The Cyprus government averted panic withdrawals last week when it allowed banks to open for the first time since March 16. Retail sales in Germany, Europe’s largest economy, unexpectedly rose for a second month in February, the Federal Statistics Office said March 28. Western Europe will use 14% of the world’s copper this year, and the U.S. will account for 8.7% of demand, according to Morgan Stanley.