Copper

Commodity market analysis usually focuses heavily on supply-demand balances. Yet in this framework piece, we argue that reported balances are an overrated gauge of underlying commodity price trends. 

MacroQuant remains tactically overweight equities, favors an above-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is bullish on gold.

Should investors chase the copper rally or use the latest bout of strength as an opportunity to sell?

We warn that weakening Chinese demand and shrinking global manufacturing will weigh on the metal’s price over a cyclical timeframe.

MacroQuant is tactically overweight equities, favors an above-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is bullish on gold and copper.

In this Q4 Strategy Outlook, we discuss where we stand on our recession call, the outlook for stocks and bonds in various scenarios, why investors are misunderstanding the impact of AI on corporate profits, whether the US dollar has entered a structural downtrend, our perspective on the yen, gold and other commodities, and much more.

Commodity market breadth would need to improve for it to signal bullish conditions for the aggregate commodity complex. We maintain a defensive tilt within commodities, favoring precious metals over the more cyclically sensitive energy and industrial metals.

MacroQuant sees downside risks to stocks over a long-term horizon but is not yet saying that we are at imminent risk of an equity bear market.

Copper’s unwind – triggered by the refined metal’s US tariff exemption – isn’t over yet. We remain short the red metal on an absolute basis and relative to gold.