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).