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Jan 07 - 10:55 AM

MUFG: Stay Selective on Commodities and Hedge Trump-Induced Tail Risks

By eFXdata  —  Jan 07 - 10:30 AM

Synopsis:

MUFG highlights the diversification potential of commodities amid Trump’s sweeping policy pivots, recommending a selective bias across energy, base metals, precious metals, and agriculture for 2025.

Key Points:

  • Policy Impacts:

    • The “trifecta” of Trump’s trade, energy, and fiscal policies strengthens the case for commodities as a diversification tool in 2025 portfolios.
    • The wide distribution of policy outcomes warrants selectivity in commodity exposure.
  • Commodity Bias for 2025:

    • Energy: Neutral-to-bearish amid potential policy-driven volatility.
    • Base Metals: Neutral-to-bullish, driven by mixed fundamentals and possible demand boosts.
    • Precious Metals: Bullish, reflecting heightened tail risks and safe-haven demand.
    • Agriculture: Neutral, with steady fundamentals but exposure to weather and trade risks.

Conclusion:

MUFG advises a strategic and selective approach to commodities in 2025, leveraging their diversification benefits while hedging against Trump-induced tail risks.

Source:
MUFG Research/Market Commentary

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