The Allocation Brief

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Topic

Commodities

A collection of 3 issues

Market calm

Crude has slipped from its peak, lifting markets, but past shocks have driven far higher prices. With supply risks on one side and weaker demand on the other, oil could swing either way. That even split may explain the calm across risk assets.

Market movements

We are a week into a major conflict in the Middle East and an associated near-sudden stop in oil and gas tanker traffic through the Strait of Hormuz. This week’s note reviews the impact so far on capital markets and commodity markets and sets out how, as an asset allocator, I am responding.

Inflation outlook

In last month’s inflation update, I set out my expectations for inflation to move from 3.37% in December to 2.93% in January. In the event, the year-on-year increase in headline CPI came in at 3.01%. That is close enough for my purposes.