Outlook for Commodities
Commodities are expected to be the best-performing asset class in 2021, with the Bloomberg Commodity index up roughly 25% YTD, but it has risen as high as 35% over the year. Recovering demand after Covid, supply chain interruptions, government regulation, and bad weather have all contributed to market tightening this year, pushing prices upward. We predict supply chain disruptions to ease in 2022, but commodity balances will appear to be less tight than in 2021. This should lead to a decrease in pricing from present levels. But, more crucially, we anticipate them to continue to outperform long-term norms. There will also be a lot of macro headwinds, which will restrict the commodities complex's upward potential. To begin with, central banks are expected to tighten monetary policy in 2022. Second, our foreign exchange experts predicts a stronger US dollar next year. Finally, there are concerns about the Chinese real estate market. If this sector continues to decline, it will exert...