BMO Economics in its 'Talking Points' note of this Friday said commodity prices have held up remarkably well (aside from that little nasty bout of negative oil prices)" in this recession.
BMO said: "Let's just say that amid the deepest decline in the global economy in the post-war era, it is passing strange that many key commodity prices have not only held up, but in some cases thrived."
It noted the Bank of Canada's commodity price index, which is burdened by a heavy energy weighting, has still managed to rise 4% from year-ago levels. To put this in perspective, the index was down more than 40% y/y seven months into the downturn in 2008-09. BMO added: "Strong gains in copper, gold, natural gas, lumber and some agricultural prices have all provided important offsets to still-soggy oil prices. While each of the strong commodities has its own particular story, the key driver is that underlying strength in the demand for goods."
According to BMO, the "overwhelming and rapid response" by policymakers helps explain how and why financial markets were able to stabilize and repair after the March turmoil. After plunging by more than 33% in a matter of weeks, the MSCI World index had fully recouped those losses by the end of summer. While it has stepped back in recent weeks, the index is still up 7% from year-ago levels, even with the clear second wave building in many major economies, BMO noted.