John Robertson

Is the Fed more important than China in setting copper prices? The chart at (VIEW LINK) (see 17 September) shows the Fed's holdings of securities over the past 10 years and movements in copper prices. Copper prices experienced a cyclical rise prior to 2007 due primarily to growth in Chinese demand. US policy was supportive but not dominant. After 2009, however, when prices might have normally fallen, the extra liquidity flows created by the Fed went into commodity markets (as they have done into all asset markets, including emerging market securities). The impact on the copper market of Fed asset buying seems to have been losing its force but the copper price has held up remarkably well while other prices have fallen. The bellwether commodity is now awkwardly poised as the Fed decides in the next few hours what to do next.


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