Against the backdrop of rising inflation risks and widespread supply threats, we think the case for investing in commodities has rarely been stronger. Investors seem to agree and have increased their broad commodity exposure so far in 2018.

Global inflows into broad commodity ETFs exceeded 4.8bn US dollars by the end of May 2018. This is more than double the full-year 2017 inflows of 1.8bn USD1.

Strong economic growth and above-trend inflation have historically been good indicators of strong commodities performance. In this paper, we take a closer look at another important commodity performance driver – curve shapes and the impact of roll yield.