The Periodic Table of Commodity Returns
The Periodic Table of Commodity Returns 2019
In 2019, every major asset class finished in the black.
And although the broad commodity market finished up 17.6% on the year, the performances of individual commodities were all over the map. For those familiar with the sector, that’s pretty much par for the course.
That said, the lack of an obvious correlation in commodity markets also makes for a thought-provoking and humbling exercise: comparing the annual returns of commodities against the data from the past decade.
A Decade of Commodities (2010-2019)
Today’s visualization comes to us from U.S. Global Investors, and it compares individual commodity returns between 2010 and 2019.
You can use the interactive tool on their website to toggle between various settings for the table of commodity returns, such as breaking them down by category (i.e. energy, precious metals, etc.), by best and worst performers, or by volatility over the time period.
Let’s dive into the data to see what trends we can uncover.
Palladium: The Best Commodity, Three Years Straight
In 2019, palladium finished as the best performing commodity for the third straight year — this time, with a 54.2% return.
You could have bought the precious metal for about $400/oz in early 2010, when it was a fraction of the price of either gold or platinum.
Nowadays, thanks to the metal’s ability to reduce harmful car emissions and an uncertain supply situation, palladium trades for above $2,000/oz — making it more expensive per ounce than both gold and platinum.
Oil and Gas: Opposite Ends of the Spectrum
As key energy commodities, oil and natural gas have an inherent connection to one another.
However, in 2019, the two commodities had completely diverging performances:
Crude oil prices gained 34.5% on the year, making it one of the best commodities for investors — meanwhile, natural gas went the opposite direction, dropping 25.5% on the year. This actually cements gas as the worst performing major commodity of the decade.
“That’s Gold, Jerry!”
Finally, it’s worth mentioning that gold and silver had a bounceback year.
Gold gained 18.3% to finish with the best return the yellow metal has seen in a decade. Silver followed suit with a similar story, rallying 15.2% over the calendar year.
Precious metals now sit at multi-year highs against an interesting economic and geopolitical backdrop to start 2020.
Where do you see the above commodities ending up on next year’s edition of the rankings?
Which Countries Hold the Most U.S. Debt?
Foreign investors hold $7.3 trillion of the national U.S. debt. These holdings declined 6% in 2022 amid a strong U.S. dollar and rising rates.
Which Countries Hold the Most U.S. Debt in 2022?
Today, America owes foreign investors of its national debt $7.3 trillion.
These are in the form of Treasury securities, some of the most liquid assets worldwide. Central banks use them for foreign exchange reserves and private investors flock to them during flights to safety thanks to their perceived low default risk.
Beyond these reasons, foreign investors may buy Treasuries as a store of value. They are often used as collateral during certain international trade transactions, or countries can use them to help manage exchange rate policy. For example, countries may buy Treasuries to protect their currency’s exchange rate from speculation.
In the above graphic, we show the foreign holders of the U.S. national debt using data from the U.S. Department of the Treasury.
Top Foreign Holders of U.S. Debt
With $1.1 trillion in Treasury holdings, Japan is the largest foreign holder of U.S. debt.
Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years.
This bond offloading by China is the one way the country can manage the yuan’s exchange rate. This is because if it sells dollars, it can buy the yuan when the currency falls. At the same time, China doesn’t solely use the dollar to manage its currency—it now uses a basket of currencies.
Here are the countries that hold the most U.S. debt:
|Rank||Country||U.S. Treasury Holdings||Share of Total|
|3||🇬🇧 United Kingdom||$655B||8.9%|
|6||🇰🇾 Cayman Islands||$284B||3.9%|
|11||🇭🇰 Hong Kong||$221B||3.0%|
|16||🇸🇦 Saudi Arabia||$120B||1.6%|
|17||🇰🇷 South Korea||$103B||1.4%|
As the above table shows, the United Kingdom is the third highest holder, at over $655 billion in Treasuries. Across Europe, 13 countries are notable holders of these securities, the highest in any region, followed by Asia-Pacific at 11 different holders.
A handful of small nations own a surprising amount of U.S. debt. With a population of 70,000, the Cayman Islands own a towering amount of Treasury bonds to the tune of $284 billion. There are more hedge funds domiciled in the Cayman Islands per capita than any other nation worldwide.
In fact, the four smallest nations in the visualization above—Cayman Islands, Bermuda, Bahamas, and Luxembourg—have a combined population of just 1.2 million people, but own a staggering $741 billion in Treasuries.
Interest Rates and Treasury Market Dynamics
Over 2022, foreign demand for Treasuries sank 6% as higher interest rates and a strong U.S. dollar made owning these bonds less profitable.
This is because rising interest rates on U.S. debt makes the present value of their future income payments lower. Meanwhile, their prices also fall.
As the chart below shows, this drop in demand is a sharp reversal from 2018-2020, when demand jumped as interest rates hovered at historic lows. A similar trend took place in the decade after the 2008-09 financial crisis when U.S. debt holdings effectively tripled from $2 to $6 trillion.
Driving this trend was China’s rapid purchase of Treasuries, which ballooned from $100 billion in 2002 to a peak of $1.3 trillion in 2013. As the country’s exports and output expanded, it sold yuan and bought dollars to help alleviate exchange rate pressure on its currency.
Fast-forward to today, and global interest-rate uncertainty—which in turn can impact national currency valuations and therefore demand for Treasuries—continues to be a factor impacting the future direction of foreign U.S. debt holdings.
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