Chart: Commodities & Global Growth
Despite all that’s gone on this year we have actually seen quite a significant reacceleration in the global economy. Notably this has been particularly pronounced in the real-world cyclical parts of the economy (manufacturing, trade, fixed asset investment).
That’s important because it’s those sectors that have the most direct impact on commodity prices. And it’s among the reasons (including geopolitics and supply constraints) we’ve seen such enduring and broad-based strength in commodities this year.
It’s also been a key driver of upward pressure on inflation, and along with stronger growth has contributed to the global policy pivot to interest rate hikes that is currently underway (with the Fed likely joining the pivot party soon).
This speaks to the highly cyclical nature of commodities.
And that’s why I always recommend keeping an eye on commodities —not just because they can be a highly useful hedge against inflation +source of alpha/absolute returns,
…but also because they give us important information about the stage of the cycle and associated macro risk backdrop.
As for the next steps in this chart, my best guess is both commodities and global growth have a window for continued strength, but that window likely closes into mid-2027 as tailwinds turn to headwinds.
When markets keep you watching, knowing when to switch off matters too.
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