“Commodities follow macro figures with WTI -9% to $61 (had to change this 3x to reflect lower prices) … copper drops 5% and natural gas hovers around flat … interest rates break through 4% with the 10-year at 3.87%, dollar & Bitcoin flat.” – Michael Nocerino, Goldman analyst
President Trump “Liberation Day” import tariffs blitz, targeting reciprocal tariffs, followed by China’s bazooka -reaction, triggered growth anxiety in many markets. Commodity prices plunged as a result, reflecting concerns about worsening macroeconomic conditions as the trade war escalates.
The Bloomberg Commodity Index is on track to post its biggest decline (-4%) in more than a year. The commodities benchmark tracks 23 futures contracts traded on the futures market of commodities in the energy, metals, agriculture and live cattle sectors.
The trade war will create increasing macroeconomic headwinds that push down commodity prices. This is the expectation of Commodity analyst Max Layton of Citigroup. He expects copper prices could fall another 8-10% in coming weeks. He believes the trade war will drive down production costs. That could be through lower oil prices or producers taking margin losses over the next 6 to 12 months.