THE sharp sell-off in commodity prices yesterday seems to be continuing this morning (May 6th). It raises a whole set of questions, particularly as equities have sold off in tandem.

Surely a sharp fall in the oil price ought to be good news? The surge in petrol prices has acted as a tax increase on western consumers, and this fall will relieve some of the pressure on their wallets. Ole Hansen of Saxo Bank says the sell-off began when the first quarter GDP numbers from the US were weaker-than-expected; yesterday's higher-than-expected weekly jobless claims exacerbated the trend. However, one of the main bullish arguments for commodities was that emerging market demand was now driving prices; that was why prices had rebounded so quickly even though the developed world recovery was still pretty weak. There is no evidence, as yet, that the Chinese economy is faltering.

Given those fundamentals, the case for arguing that commodity prices have been driven to excess by speculators looks rather stronger. Silver is a case in point. Its strength owes nothing to fundamentals and a lot to investors seizing upon it as a "poor man's gold"; in one recent session, the silver ETF saw more trading volume than its S&P 500 equivalent. Silver's headlong rise looked very bubble-like and the CME futures exchange has increased margin requirements sharply; as Mr Hansen puts it, traders had the choice of putting up more cash or taking profits. They have clearly done the latter. (This just shows what can be done by the authorities to pop bubbles if they wish; if only lower loan-to-value regulations had been imposed in the US housing market.)

Nevertheless, the argument that the price rise is all down to speculators is far from proven. It is noticeable that agricultural prices have held up better than most, perhaps because weather patterns are affecting the US planting season. Oil aside, food prices are the key commodity class for developing country prosperity.

Is this the end of the commodity bull market? It is far too early to say that; there was a similar sell-off this time last year. Until demand from emerging markets slackens, or new discoveries are brought on stream, there seem likely to be bouts of upward pressure.

The equity market sell-off could be ascribed to the same weak growth numbers that sparked the commodity decline. Nevertheless, it does draw attention to the contradictions inherent in this long bull-run. Central banks are holding interest rates low (and using QE) because the economy is weak. But if the economy is weak, why have equity and commodity prices done so well?