While much has been made around the fact that Lumber futures are now down for the year having been up c.200% at its peak, good luck trying to find actual lumber at your friendly neighborhood Home Depot at anything but nosebleed prices. Why? Simple: rising prices are stickier than superglue, and once higher producers will either wait until the last possible moment to cut or will simply cartelize and limit production until demand eventually catches up with the new level of supply.

Regardless, of the lag behind commodity end prices, lumber is still the big exception rather than the norm.

As DB's Jim Reid writes in his daily Chart of the Day titled "Food (energy and metals) for thought", even as the reflation trade has stumbled over the last couple of months, commodities remain near their six-year highs. In fact, looking at the chart below, which shows the post-trough recovery in commodity prices over the last 20 recovery cycles going back to 1914, the post-Covid recovery is now the strongest on record, having just overtaken even the rebound from the 1933 Great Depression.

So for those who are calling an early end to the commodity rally, Bloomberg's John Authers has some words of caution: "in the case of the post-Depression rebound, the rally in commodities went on to be enduringly strong for another two years".

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And while it is possible that the commodity price reaction to an extreme and unusual downturn will differ from historical patterns, Authers concludes that "it’s hard to say at present that there’s any good evidence that commodity prices aren’t going to keep contributing to inflation for a while."