The Baltic Dry Shipping Index (BDI), which gauges shipping rates in the world's busiest shipping regions, fell for a 12th consecutive day today, likely in response to news on China's GDP, which was weaker than expected in the third quarter. The BDI fell 4.6% to 1,293 to its lowest level since Sept. 25, 2002.
The index has fallen massively and precipitously from its record high of 11,793, which was set on May 20 of this year. A month ago the index was at 4,975; two months ago it was at 7,344. The current level is now in the middle of the roughly 1,200-point range that existed from 1995 until 2003 when shipping rates and commodity prices began their ascent.
The BDI, according to the Baltic Exchange, provides "an assessment of the price of moving the major raw materials by seas. Taking in 24 key shipping routes measured on a timecharter and voyage basis, the index covers supramax, panamax and capsize dry bulk carriers," that carry a wide range of commodities. The index therefore provides useful information on the pace of economic growth.
If financial markets stabilize, it is highly likely that the BDI will claw back and, with it, commodities prices.
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Tony Crescenzi Blog Rate Cut Odds Up 10/20/2008 11:33 AM EDT Odds are at 100% for cuts of at least 25 basis points at each of the next two Fed meetings.
Tony Crescenzi Blog Closing Credit Indicators 10/20/2008 3:59 PM EDT There was substantial improvement in credit signals across the board today.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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