Goldman Sachs doubles down on its bullish outlook for commodities, saying the recent turmoil in global equity markets only bolsters its view that raw materials are set to perform well in the months ahead.
“Historically, when you look at commodities they perform very well during rate-hiking cycles,” Jeffrey Currie, Goldman's head of commodities research tells Bloomberg. “Oil [is] backwardated, where spot prices sit above forward prices, so you buy at a discount and roll up the curve. In other words, it pays you to be long."
Currie also believes reforms in China, where policy makers have moved to reduce excess capacity, also boost raw materials as they have improved utilization rates and helped companies to cut debt loads; he says “the supply-side reforms in China [have] been absolutely brilliant.”