Commodities Dance to the Recession Tune
- By John Tierney
- 5 min read
Summary
- After major supply shocks earlier this year, commodity prices are falling as markets adjust and become less unbalanced. But supplies remain tight in the energy and agricultural sectors.
- Commodities as an asset class are down 10% – mostly in recent days – since we recommended an overweight position in early April. Despite the recent selloff, commodities are still up 13% year to date.
- We see limited further downside for energy and agricultural markets and continued upside risks due to tight supplies and potential supply shocks.
- The outlook for industrial metals depends on how China’s reopening proceeds. We expect it will be measured rather than aggressive, which should keep further downward pressure on prices.
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