Additional food for thought on commodities markets
December 5, 2006
Here is some additional food for thought on commodities markets and a reminder that we have the major market moving number, the US jobs report, coming up on Friday morning. We'll most probably be range bound until we get that data which is expected to show a larger creation of jobs during November in the US than in October. If the numbers come in under expectations, the march upwards will resume as the dollar will come under renewed pressure.
In the event that the European Central Bank (ECB) makes some significant comments about their potential rate increase on the Euro on Wednesday morning, we could see some interesting gold/dollar action in the interim.
Commodities bull run to resume in H2 2007 -UBS
Mon Dec 4, 8:58 AM
LONDON (Reuters) - The commodities bull run will resume in the second half of next year as economic and demand growth pick up speed, UBS Wealth Management said on Monday.
But weak demand in the first half will cap commodity price gains in the first half of next year, the Swiss-based money manager said in a release.
"A growth slowdown in the U.S. and Europe suggests weaker demand for commodities in 2007 from these regions," UBS said.
"The relatively strong growth we foresee in China and elsewhere in Asia should prevent global demand from declining as much as in previous cycles."
But, UBS expects the U.S. Federal Reserve to cut interest rates in the United States and stimulate growth and demand for commodities in the second half of 2007.
The wealth manager stressed that investments in the sector should be seen as a long-term commitment.
"Precisely timing a given entry point and exit point in commodities is difficult given their high volatility and many unpredictable market drivers such as geopolitical risk," it said.
"It seems inadvisable for investors to turn their backs on commodities as an asset class despite the potential for short-term shocks."
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