Monthly Commodity Insights – October 2020: Commodities wary for US elections
In this publication: What will a Biden presidency bring for commodities?
The US Presidential elections are approaching. On 3 November (or before by mail) US citizens will choose a president.
Our US economist has defined four possible outcomes of the US presidential elections. The most likely outcome is that Biden wins the presidency. What will a Biden presidency bring for commodities?
We expect that Democratic policies would probably result in a considerably stronger US economy in the coming years. This is positive for commodities in general overall, especially if Chinese growth is resilient.
Moreover we also expect US real rates to remain negative or to decline further in 2021. This supports commodity prices due to the historical negative relationship between the two.
The dollar will probably be supported in the near-term (= downside price risk dollar-denominated commodities) but we expect weakness in 2021. Some near-term weakness in commodity prices will likely result in higher prices afterwards.
