Matsuda Global - Commodities Set to Rebound

Tokyo, Japan, August 11, 2015 (Newswire.com) - Matsuda Global has advised clients that the slow, protracted slide in commodities prices will almost certainly be reversed when central banks move to boost growth as China’s economy slows and the US recovery falters.

The stark call was made in the Japan-based investment boutique’s latest quarterly client bulletin.

We're well into the quarter and evidence is mounting that investors have become particularly jittery about the road ahead and, consequently, they've begun to take risk off the table as we've seen in the mainland Chinese markets

Matsuda Global , Asian Markets Analyst

“We’re well into the quarter and evidence is mounting that investors have become particularly jittery about the road ahead and, consequently, they’ve begun to take risk off the table as we’ve seen in the mainland Chinese markets,” said a Matsuda Global Asian markets analyst. “We’ve also seen US equities give back gains made this year and a clear lack of motivation for a push above recent highs in the Dow and the S&P,” she added.

According to “Matsuda Global”, the Federal Reserve will be unable to normalize monetary policy and could potentially find itself moving to combat stagnating growth with more stimulus. It predicts that Chinese authorities will add further stimulus in the form of infrastructure projects that will boost demand for raw materials including iron ore and copper but it says the main engine in commodity price growth will be quantitative easing.

Most commodities are priced in US dollars. With the dollar currently trading strongly on expectations of a rate hike, any sense that the increase won’t materialize will quickly spike commodity prices higher.

“The consensus at the moment is that a return to QE at the Fed is unthinkable,” explained the Matsuda Global analyst, “but they have no interest rate ammunition left so what else can they do but inflate asset prices in the hope the trickle-down effect boosts the real economy”.