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MNI MARKET ANALYSIS: Have Commodities Reached Their Peak?


Executive Summary:

  • The sharp deceleration in global liquidity is pricing in a downside risk in commodities
  • Selling pressures may rise on some China-sensitive commodities such as copper in case of a disinflationary outlook in 2022

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The chart shows that the significant deceleration in global liquidity (measured as the combined assets of the major central banks) could start to weigh on commodities in the coming months and is pricing in a disinflationary outlook. The annual change in global liquidity has strongly led the percentage annual change in commodities by 9 months in the past cycle.

Source: Bloomberg/MNI

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