Commodity Bull Market Expected Amid Inflation and Fed Policy Shifts

On May 20, Citic Securities released a report indicating that the ongoing conflict involving the U.S., Israel, and Iran continues to affect the oil market, with the reopening of the Strait of Hormuz remaining uncertain, keeping oil prices elevated. According to Jin10, if inflation rises further, the Federal Reserve may find it challenging to lower interest rates, impacting the commodity market's bull run. However, analysis of statements from the new Federal Reserve Chair suggests that the Fed's response to high inflation might be less sensitive, potentially adopting a policy mix of 'rate cuts followed by balance sheet reduction.' This year, the commodity market may benefit from an environment of inflation coupled with monetary easing. Additionally, many commodities are facing favorable supply-demand imbalances, leading Citic Securities to anticipate a promising bull market for commodities within the year.