The US economy is en route towards a soft landing. Inflation is trending towards the Federal Reserve’s (Fed) 2% inflation target, and growth is cooling (not collapsing). The cyclical context matters as commodities enjoy positive returns during a “good” cutting cycle (growth firm, declining inflation), and vice versa, suffer negative returns during a “bad” cutting cycle (growth decelerating, sticky inflation).
To put this into perspective, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), delves into MUFG’s latest thought leadership report, titled, “US Federal Reserve and commodities – Commodities outperform when the Fed cuts during soft landings” (see here), in this week’s podcast. He recommends a more selective, less constructive, tactical approach to commodity investing to harvest returns in an era where inflation is nearing target, there are no signs of an imminent US recession and where markets are pricing in a soft landing.
The MUFG Global Markets Podcast can be found directly on our MUFG Podbean page or via a number of platforms, including Spotify, Apple, and Stitcher.