① Kathy Kriskey, senior commodity and alternative investment strategist at Invesco, points out that in the months before and after the start of the easing cycle, raw material prices usually show a positive return; ② when the economy can achieve a soft landing, commodity prices increase particularly strongly, which is all the more reason to hold this sector as part of a broader investment portfolio.
Financial Services Association, March 27 (Editor: Xiaoxiang) As gold prices hit record highs during the year, international oil prices hit a four-month high this month, and the rise in cocoa futures surpassed that of Nvidia, the attention paid by many industry organizations to the commodity market is also heating up recently — bullish players have sprung up. And this week, the world-famous asset management giant Invesco became the newest of them.
Invesco said that when the central bank cuts interest rates, commodity prices usually rise, which supports its reason for increasing commodities in the next few months.
Kathy Kriskey, a senior commodity and alternative investment strategist at the company, points out that raw material prices usually return positively in the months before and after the start of the easing cycle. When the economy is able to achieve a soft landing, the price of raw materials rises particularly sharply, which makes all the more reason to hold this sector as part of a broader investment portfolio.
Federal Reserve officials stayed on hold on last week's interest rate decision and maintained the forecast that interest rates would be cut three times throughout this year. At the same time, traders are betting that other central banks, from the Bank of England to the European Central Bank, will also cut borrowing costs by the middle of this year.
“Everyone has looked at other asset classes before, but we've focused on commodities over the past five easing cycles, and commodities have actually performed well. The fundamentals are currently in good shape. As people become more satisfied with the economic environment, they are expected to invest more money,” Kriskey said in an interview.
Commodity prices have been generally booming in recent weeks due to soaring prices of copper, cocoa, crude oil and gold. The Bloomberg Commodity Index has now risen to its highest level since December last year.
Among them, the increase in cocoa prices was particularly strong due to poor harvests in Côte d'Ivoire and Ghana, the main cocoa producers in West Africa. US cocoa futures broke through the level of 10,000 US dollars per ton as never before on Tuesday, and the price doubled in less than two months.
(Comparison of the rise and fall in futures prices of major asset classes during the year)
Some analysts said that until now, one of the main characteristics of the commodities market in 2024 is a decrease in price fluctuations, as most markets are still in sufficient supply.
Invesco operates a number of exchange-traded funds (ETFs) in the commodities sector, with total assets of around $10 billion. Among them, the largest commodity fund is Invesco's Best Yield Diversified Commodity Strategy K-1 ETF (PDBC), with assets of approximately US$4.7 billion.
It is worth mentioning that in addition to Invesco, Goldman Sachs Group also said earlier this month that commodity prices will rise this year as the US and ECB are about to lower interest rates to help support industrial and consumer demand. The bank believes the return on commodities is expected to reach 15% as borrowing costs fall, manufacturing recovers, and geopolitical risks persist.
According to Goldman Sachs's year-end forecast, the price of copper is 10,000 US dollars per ton, the price of aluminum is 2,600 US dollars per ton, and the price of gold is 2,300 US dollars per ounce.
Macquarie Group also pointed out earlier this month that commodity prices are entering a new round of cyclical rise, driven by tighter supply and an improvement in the global economy.