The most eagerly awaited event this year is undoubtedly the start of the easing of restrictive monetary policy in the US. Although some data has brought an increase in risk aversion, the latest PCE, a metric most used by the Fed, showed an increase of 0.3% in February, below the market's estimate of 0.4%. As a result, the annual variation rose from 2.4% to 2.5%. If labor market data continues to show moderation, we have a better scenario for reducing the country's interest rate, currently in the 5.50%-5.25% range.
It appears likely that the US central bank will achieve a "soft landing," converging inflation to the target without triggering a recession. The recession scenario would likely be the worst outcome for the commodities market, but it appears unlikely at present. Additionally, bullish revisions to GDP - with the IMF projecting 3.2% growth - and manufacturing PMIs in both the US and China exceeding 50 (indicating expansion) are indicating to the market the prospect of higher raw material consumption than initially anticipated.
Energy commodities face a confluence of supply risks. These range from difficulties experienced by ships using the Suez Canal to Ukrainian drone attacks on Russian refineries. Additionally, low US stockpiles have resulted in wider oil derivative cracks, while higher oil premiums reflect heightened geopolitical tensions in the Middle East. Looking to metal and grain commodities, China's recent stimulus measures offer positive news. The country's decision to cut its 5-year Loan Prime Rate by 25 basis points to 3.95% signals Beijing's willingness to utilize policy tools to promote economic growth exceeding 5% this year.
In addition, when analyzing the current scenario, one asset that has benefited from this environment of greater geopolitical risk and interest rate cuts is gold. Gold, which also serves as a store of value, has accumulated a rise of approximately 10% in 2024 (+US$194/ounce). However, it's important to note that although the reduction in interest rates weakens the dollar, the US public deficit will likely cause the dollar to strengthen due to higher yields in its treasuries. Therefore, current events will bring relief to commodities, but other fundamentals, such as a still-strong dollar and the slow global economic recovery, especially in Europe, should limit gains.
