Master Rider Blog

Baltic Dry Freight Index

October 4th, 2007 NW Teong

I have mentioned about this index as one of the leading indicators for world economy on my blog “Baltic Index” dated 14 Sept 2007. It has since surged from about 8300 on 14 Sept to 9561 yesterday, i.e. a surge of about another 15% in a space of less than three weeks! Please see the chart below:-

Courtesy of Yahoo Finance 

Of course, this huge surge is partly due to the aggressive cut in the interest rates by the US Fed. All things being equal, a cut in US interest rates would translate to a weaker US$, which would translate to a higher prices in all commodities and freight prices where they are mostly quoted in US$. As a powerful leading indicator of world economy, a continued surge in this index tells me that the world economy remains buoyant. This is a strong indicator and good news to all shipping companies as well as commodities related industries.

After rising strongly since 17 Aug, as mentioned in my yesterday’s blog, regional markets are likely to take a pause to digest the gains so far. I reckon markets will gyrate in their usual manners in the next few days if there are no price-moving news. In short, markets could be pretty “boring” in the next few days. Perhaps, it is time to take a break and relax a little and watch how the markets play out in the next few days before we fine tune our portfolio for the final harvest in the last quarter of the year! Cheers!

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Entry Filed under: Macro, Stocks, Singapore