MUFG Global Markets Podcast

Contextualising commodities strength when the Fed cuts interest rates

Commodities have historically generated positive returns going in to the first Federal Reserve (Fed) interest rate cut and afterwards. Whilst US exceptionalism and sticky inflation may delay Fed easing into mid-year (and limit its scope), Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), believes that the current set up is increasingly reminiscent of the soft landing Fed easing cycle of 1995 – a period when commodities surged more than 20% within the first nine months. Yet not all commodities outperform and Ehsan breaks down which sub-commodities are best positioned to experience the strongest gains as the Fed eventually cuts rates.

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