If early 2019 has been a story of mixed signals, you wouldn’t know it from the commodity sector. Crude futures have rallied nearly 30%, with Brent crude creeping back up near USD 70/bbl, while the broader Bloomberg CMCI commodity index has risen 10% for the year. Investors in the asset class have been undeterred by a glut of dovish central bankers, weakening macro data, growth forecast downgrades, and an inverting yield curve.

But far from running out of steam, we see additional gains for commodities ahead as they continue to benefit from a number of commodity-specific factors:

So despite the broad commodity rally this year, we continue to see attractive risk-reward opportunities for the asset class. We expect a high-single-digit rate of return for a broad basket of commodities in 2019, and maintain our preference for energy sector equities in Europe.