The S&P Goldman Sachs Commodity Index (GSCITR) of commodities tracked by S&P Goldman Sachs is up 35% this year, surpassing the growth of the US stock index S&P 500 for the first time in a decade.
By comparison, in 2021, the S&P 500 is up 23%, the dollar index is up 7%, while the 10-year US Treasuries are down 3%.
Going into 2022, commodities typically perform well at the end of economic cycles, analysts say, due to their ability to remain competitive with equity markets as global economic growth expands.
“We like both stocks and commodities,” said Koen Straetmans, senior multi-asset strategist at NN Investment Partners, based in the Netherlands, with 298 billion euros ($336 billion) under management at the end of September. culture, and we have a balanced investment view for both in 2022. It’s hard to say which will perform better.”
The Commodity Price Index outperforms other assets in 2021.
Among commodities, coffee stood out the most in terms of price increase with an increase of 84%. Crude oil is also in the top of the commodity price increase this year, with an increase of 40%; VND also increased by 21%; while gold fell 5% – partly due to the prediction that the US is about to raise interest rates.
Most commodities will increase sharply in 2021, gold alone will decrease.
Gold is a top focus for investors in general, and the sharp drop in the price of gold after a 25% gain in 2020 has affected the inflow of money into investment addresses. Morgan Stanley data shows that US commodity exchange-traded funds (ETFs) have seen $5.5 billion in net outflows this year after 2020 net outflows hit 41 billion USD.
U.S. commodity exchange-traded funds (ETFs) have seen cash outflows despite a rise in commodity prices this year.
Stock ETFs in 2021 witnessed a sharp increase in cash inflows.
Analysts say that in 2022, the world’s top consumer of goods – China will grow weaker, but the government of this country is able to balance the crisis in the real estate sector with measures. moderate stimulation.
China’s industrial output.
The difficulties of 2022 do not end there because the US economic outlook is still uncertain. Some economists predict the world’s No. 1 economy will grow more slowly next year after a key Democrat lawmaker ‘deals a fatal blow’ to the 1.75k Spending Plan billion dollars of President Joe Biden, making the future of the US economy after Covid uncertain in the context of the rapidly spreading Omicron variant virus.
Goldman Sachs lowered its forecast for US GDP growth in 2022, as did Mark Zandi, chief economist at Moody’s Analytics, after US Senator Joe Manchin on Sunday (December 19) said he could not support the proposal. Biden’s ambitious initiative “Building America Again Greater” – aims to expand the social safety net and tackle climate change.
“If the BBB does not become law, the economic recovery will be more likely to stall if we suffer another wave of severe pandemics; a scenario that is increasingly likely as Omicron is spreading rapidly “, Zandi wrote on Twitter on Monday (December 20), adding that he predicts GDP growth to be half a percentage point lower in 2022 if the aforementioned bill does not become law.
Next year, as logistical disruptions ease, global demand for goods will increase sharply as manufacturing industries catch up with resupply, amid an expected more abundant supply of raw materials.
“There will also be some macro headwinds, which will limit the potential for further upside in the aggregate commodity markets as a whole,” ING analysts said in a news release.
While a slowdown in commodity prices will reduce returns for commodity investors, policymakers and consumers alike are looking forward to it. Inflation forecasts in 2022 will continue to exceed central bank targets, but will eventually fade as a macroeconomic concern. Energy prices are more likely to stabilize and decline in the spring, thanks to easing in energy demand, rising fuel production and perhaps also a slowing Chinese economy. Shipping issues may take longer to resolve. However, stimulus packages are shrinking around the world and high energy bills will cool demand. As vaccination rates rise, more workers are likely to return to the workforce, and spending can shift back to services, helping to alleviate commodity shortages.
Detailed commodity price volatility in 2021.
Reference: Refinitiv
