Super cycle in commodities “super close”: ANZ

March 23, 2021

SINGAPORE -- The global recovery has already matured into an expansion, supported by policy stimulus, a lack of structural damage, vaccine development and central banks committing to tighten later in the cycle. In many economies, unemployment is falling quickly, bankruptcies have been contained and banks are over-capitalised rather than over-loaded with bad loans.

These are the key findings of ANZ Bank in its quarterly research survey of the global economy.

ANZ says commodity fundamentals are at their strongest in more than a decade. "Calling a super cycle, in our view, is speculative at this point, but a super cycle does seem to be super close," the report says. "Not much has to change for it to be probable.

"This creates a challenging cocktail for financial markets. Asia is likely to lead the tightening cycle this time, with advanced economies consequently more vulnerable to the Fed's eventual shift in stance."

The report says two issues are likely to garner increased attention over 2021: calibrating the likely rise in inflation and assessing whether growth can remain stronger than the pre-pandemic norm. (ATI).