Commodities selloff looks to be nearing an end

A bottoming in commodity prices is important for inflation expectations and bond yields, which have fallen in concert

"The plunge in global IP growth in H1 has weighed considerably on oil and commodities, and a turn in fundamentals would likely see a bottoming in prices. The selloff has overshot, as they recently explained", says Barclays.

Additionally, the slowdown in IP contributed about 7pp to the recent oil selloff, larger expected stock builds (7-8pp), the dollar rally (5pp) and CFTC positioning unwind (5pp) also helped fuel the selloff. However, oil prices are notably below our fitted estimate.

Industrial metals have corrected by 20% since May as the global slowing and China fears have weighed on prices. The three other peak-to-trough selloffs in industrial metals since 2011 have been 19%, so the recent one is more likely nearing a bottom if recent history is a guide.