• Investors have been questioning if the trend in commodity prices could persist in the medium term as global demand keeps weakening and a growing range of ‘fundamental’ indicators keep pricing in ‘cheaper’ commodities. that the sharp.
• We have seen that commodity prices have been constantly reaching new highs despite China imports plunging in recent months.
  • As China represents over 50% of the total demand for some commodities (i.e. copper), the two times series have historically strongly co-moved together in the past 20 years.
• The chart below shows that the sharp decrease in the annual change in ‘liquidity’ (G4 CB assets) has been also pricing in ‘cheaper’ commodities in the coming months.
• Significant changes in central banks’ total assets have strongly led commodity prices in the past cycle (by 9 months).

Source: Bloomberg/MNI.