Consensus strongly believes that we will see interest rate cuts this year. While we thought that markets were getting a little ahead themselves in terms of the timing and scale of the cuts at the beginning of the year, markets have recalibrated their views and are pricing in the first cuts for Federal Reserve and European Central Bank around the middle of the year. We believe that rate cuts will be positive for most cyclical asset classes, including commodities. Our observation is that lower real interest rates are price positive for commodities (Figure 1). The line of best fit indicates that the 1% decline in real ... (full story)