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Commodities markets are booming. Oil is up about 30 per cent this year, copper just hit a nine-year high and grains markets are experiencing shortages.
But there’s a subtler factor helping propel the value of the world’s raw materials ever higher: yield.
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At a time when interest rates are feeble and bond yields remain historically depressed, rolling positions along the commodities futures curve offers passive investors tempting returns. It’s a proposition that has gotten some of the biggest research departments on Wall Street, from Goldman Sachs Group Inc. to Citigroup Inc. talking up commodities returns this year.