Core Viewpoint - The Federal Reserve's interest rate cut cycle has officially begun, presenting new opportunities and challenges for the commodity market [1] Group 1: Impact of Interest Rate Cuts on Commodities - Historically, commodities tend to benefit from interest rate cuts, with an average increase of 3% in the nine months following the first cut [1] - The price movement of commodities typically follows a specific pattern: an initial rise in the first month after the cut, followed by a pullback in the second and third months, and a resurgence in the fourth month [2] - The performance of commodities during rate cut cycles is influenced by various factors, with the macroeconomic backdrop being crucial [1][4] Group 2: Differentiation Between "Healthy" and "Recessionary" Rate Cuts - In "healthy" rate cut cycles, such as those in 1995 and 2024, commodities have shown an average return of 15% over nine months, primarily driven by energy and precious metals [4] - Conversely, in "recessionary" rate cut cycles, like those in 1998, 2001, and 2019, commodities faced an average decline of 16% [4] Group 3: Sector Performance During Rate Cuts - Energy and precious metals are the strongest performing sectors during rate cut cycles, with average increases of 10% and 7% respectively in the nine months following the first cut [6] - Industrial metals lag behind, with an average decline of 4% during the same period [6] - Agricultural products and livestock show no clear performance trends during rate cut cycles [6] Group 4: Future Scenarios for Commodities - Three potential scenarios for the future of commodities have been outlined: 1. "Bronzilocks" scenario: Global economy remains resilient, leading to strong commodity returns [10] 2. Recession scenario (40% probability): High risk of U.S. economic recession, resulting in downward pressure on commodities [10] 3. Re-inflation scenario (45% probability): Risk of persistent inflation, with commodities expected to yield an average monthly return of 1.6% [10]