Opening Statement from the March 2021 CCPM Forecaster

Opening Statement from the March 2021 CCPM Forecaster

Originally published on March 1, 2021 (pre-market release)

Overview

Despite numerous uncertainties regarding coronavirus variants and effectiveness of approved vaccines against these variants, the global economy continues to show marked improvements. These improvements are largely the result of a reduction in the number, severity and duration of economic lockdowns. Moreover, massive amounts of economic and monetary stimulus have also aided the recovery.

Moving forward, further improvements to the global economy will depend largely on the effectiveness of the various COVID vaccines against all coronavirus variants.

Expectations for a robust global recovery can be seen by noting the recent surge in the commodities index EFT, GCC. Much of the recent rise in GCC has been due to the very strong rally seen in crude oil. The rapid rise in the 10-year US Treasury yield has also contributed indirectly to the rally in GCC. 

In the US, the highly debated COVID stimulus bill ($1.9 trillion) was finally passed by the House (as expected) on Saturday and will most likely pass the Senate in coming days after some modest revisions have been made.

Once this stimulus is passed, we expect the global capital markets to regain some strength. Although the equities markets have other issues that have accounted for recent weakness, we expect passage of the stimulus to be bullish for most commodities. 

Finally, note that the IMF boosted 2021 economic growth for the US to 5.5 percent in its January World Economic Outlook Update. Other than Japan, the US was the only advanced economy to receive upward projections for 2021 growth. Meanwhile, all other advanced economies received lowered projections. 

In contrast, emerging Asia is expected to lead the road to recovery in 2021, with India (IMF est. GDP growth of 8.8 percent) followed by China (IMF est. GDP growth of 8.2 percent).

Although estimates for a strong recovery in China offer an especially bullish case for global commodities demand...