A short-term reprieve, before prices fall further

President Trump’s decision to delay the proposed 10% tariff on just over $150bn of Chinese imports gave a lift to most industrial commodity prices this week. That said, any optimism about an improved global growth outlook was tempered by the release of weak Chinese and German activity data. We expect the global economy to slow further in the remainder of this year, which suggests that prices of industrial metals, in particular, have further to fall. Looking ahead, major data releases are few and far between next week, aside from the euro-zone flash PMIs (Thursday), which we expect to show another leg-down. Meanwhile, the minutes of the FOMC July 31st meeting (Wednesday) and the Jackson Hole speech (Friday) by the Fed chair, Jerome Powell, should shed some light on the direction of US monetary policy. If Powell appears reluctant to signal multiple rate cuts, the price of gold could ease back. But there may be only a limited price reaction by other commodities given that they have so far mostly shrugged off the positive implications of lower US yields.