CMC Markets – Lumber Tops Out for Volatility, Again

It was a comparatively subdued start to the week across most asset classes in terms of volatility, with few stand outs. One instrument of interest however was Lumber which again found itself in the spotlight after the underlying slipped towards fresh lows for the year.

We’ve seen a lot of two way price action on this trade in recent months, but right now the rising cost of borrowing is seen as putting off homeowners from undertaking redevelopment projects. That in turn is constraining demand, but in terms of commodities it was the most volatile on Monday with a daily print of 299% against 186% on the month.

Crypto assets were in focus yesterday with a collapse in the bell weather Bitcoin price leading the way. Rising interest rates seem to be a key driver of sentiment here, perhaps knocking some of the air out of the price, but the question has to be where will this end.

For those who saw digital assets as a safe play in a rising inflation environment, this could be seen as a wake up call, but it’s also worth noting that we’ve seen the pattern before where volatility remains subdued in traditional asset classes, cryptos finds elevated levels of price action. Daily vol on Bitcoin pushed out to 130%, but Solana was even more active at 213% on the day versus 90% on the month whilst Tron remains active, posting 198% over 101%.

Elsewhere, global growth fears are affecting broader equity markets so whilst elevated price action was reported across many bourses, those seeing the heighted levels of vol had other specific factors in play. Some European markets struggled off the back of hawkish notes from ECB policymakers over the weekend, leaving the French index to print 36.3% in the day versus 21.2% on the month, whilst the Dutch benchmark came in at 35.7% versus 27.3%.