Markets pause for a reality check

Industrial commodity prices have typically eased back in the past week in sympathy with other assets, as markets have reassessed the outlook for US interest rates and the dollar. In particular, (poorly founded) speculation that G20 central banks meeting in Shanghai last month came to a tacit deal to weaken the dollar continued to unravel. This underlines the point that fickle investor sentiment alone is not enough to provide a lasting boost to prices. Instead, a sustained recovery will require additional evidence of the production cuts and demand increases necessary to rebalance over-supplied markets – although that is still what we expect to happen for oil and most metals over the remainder of the year.