Dear Marvin Perez

Please find below our latest publication:

 Commodity iWatch - Not yet last call at the punch bowl (32p)

(see pages 4-11, Market Analysis: Not yet last call at the punch bowl). Global market price action supported a largely more bullish view of both growth and the tail risks, as equities and cyclical commodities like energy and base metals saw further support, while safe haven assets like gold and bonds saw weaker demand. Though there are clearly positive signs that markets are recovering, the recovery is still likely to be slow and shallow given the size of the 2008 recession, and central banks are unlikely to be in a hurry to take their respective economies off life support until they are confident that their economies will not lose the momentum from the tightening conditions that market-determined lending rates would likely create. Keeping the punch bowl out there for longer does raise the risks of inflation, but high unemployment in the US and eurozone will likely prevent these central banks from shifting policies too quickly while emerging market central banks may also wait to see how Japan's devaluation affects their own growth recoveries, potentially delaying an Asian tightening cycle. Our base case continues to see sideways energy markets and offsetting bullish metals / bearish agriculture markets through H1. The eventual rise in real interest rates, as monetary policy normalises, will be bearish for commodity prices and curve structure, but central banks are unlikely to end the party just yet.