US risks: A further fall in commodity prices, in particular crude oil – Goldman Sachs

FXStreet (Delhi) - Commodities Team at Goldman Sachs, remains bearish on industrial metals, and has flagged a downside risks to their forecasts for crude oil in the near term given the high level of inventories.

Key Quotes

“Should this risk materialize, this would drag headline inflation down, masking the acceleration in core CPI; hurt the RUB and MXN; amplify credit risk in US HY in other large oil producers; and, more broadly, increase risk premium across assets. Ultimately, one should not lose sight of the fact that lower energy prices represent, over the medium term, a transfer of savings towards advanced economies. The trades that are most directly exposed to a decline in crude oil are long US inflation and our EM FX basket.”