As the Federal Reserve embarks on a rate-hike trajectory, the prevailing logic of ample market liquidity is undergoing a marginal adjustment. With the tech-driven boom coexisting alongside subdued demand in traditional sectors, how exactly does a Fed rate hike influence the supply-demand landscape and transmission channels of major global commodities? This analysis explores the subject through two lenses: the macroeconomic transmission mechanism and the specific logic of individual sectors.

From a global macroeconomic perspective, current growth drivers are exhibiting a pronounced structural divergence. The technology sector, particularly investments in artificial intelligence, is fueling performance in related capital market segments, while traditional sectors like manufacturing and real estate are broadly grappling with weak demand and capacity adjustments. Meanwhile, the link between growth and employment efficiency is breaking down—heavy capital spending in emerging industries has not yet translated into broad-based job creation, and slowing demand in legacy sectors is producing a "K-shaped" trajectory in overall economic momentum. Within this backdrop, the Fed's rate hikes not only tighten liquidity expectations but also marginally dampen the demand side of the real economy. For most commodities—aside from those directly benefiting from industrial upgrades—the primary upward driver is gradually shifting from demand-pull to supply constraints and cost support. As liquidity tightens, overall market volatility is expected to converge.

On September 17, the Federal Open Market Committee (FOMC) voted unanimously 12-0 to raise the federal funds rate target range by 25 basis points to 5.25%–5.50%, marking the first hike since July 2023. Looking back at rate-hike cycles since the 1970s, the duration and cumulative magnitude of the Fed's monetary tightening have consistently had profound effects on global economic growth and financial market stability. Several historical periods illustrate this: between August 1986 and February 1989, the economy achieved sustained growth during the cycle, with GDP growth actually improving. From June 1999 to May 2000, the tightening triggered liquidity contraction, which was subsequently accompanied by the deflation of the internet bubble. Between June 2004 and June 2006, a substantial cumulative rate hike indirectly contributed to the subprime mortgage crisis and the ensuing global financial meltdown.

Objective observations drawn from this history point to two key insights. First, the marginal impact of cumulative rate hikes matters: when the cumulative increase is small and the pace is moderate, the impact on the real economy tends to be manageable, but when the cumulative magnitude is large and rates remain elevated for an extended period, downside pressure on the economy intensifies significantly. Second, the absolute level of the federal funds rate is not the sole indicator of economic stress; market fragility depends more on leverage ratios, asset valuations, and the actual carrying capacity of the real economy. Additionally, there is a notable lag in how technology investment translates into productivity gains. If the pace of technological application and commercialization falls short of expectations, a pullback in capital expenditure could also disrupt upstream demand in the supply chain from time to time.

As the high-rate environment persists, the transmission logic across different commodity sectors is undergoing a structural shift. "Computing-power metals" such as copper, aluminum, and tin have shown robust demand resilience in the first half of this year, driven by AI data centers and infrastructure buildout. In contrast, nickel and other traditional industrial metals have underperformed, tethered as they are to conventional real estate and certain alternative battery technology pathways. However, under the restraint of a prolonged high-rate environment, a phased slowdown in capital expenditure may cause demand growth for computing-power metals to plateau, while traditional metals will need to wait for a meaningful recovery in physical consumption. For gold, the short-term challenge of higher holding costs is offset by more durable tailwinds: global de-dollarization trends, central bank buying, and longstanding concerns over public debt levels and monetary credibility continue to provide a solid underlying value anchor, with investment demand and safe-haven attributes remaining in a persistent tug-of-war. In the energy and chemical complex, supply-side disruptions remain the dominant factor. Geopolitical tensions have constrained passage through the Strait of Hormuz and related shipping lanes, keeping crude supply tight and transmitting cost pressures downstream to diesel, gasoline, and the olefins and aromatics chains. However, as seasonal demand fluctuates and high rates dampen consumer spending capacity, this supply-driven cost transmission may face diminishing marginal returns. In agriculture, prices are primarily influenced by weather conditions and global supply chains. While the earlier El Niño phenomenon fueled concerns over South American soybean output and Southeast Asian cash-crop yields, the actual impact remains under observation. Beyond monitoring weather shifts and yield forecasts, market participants should focus on stock-to-use ratios in major producing regions—ample inventories tend to effectively cushion price swings caused by climatic variability.

In conclusion, the Fed's rate hikes are reinforcing the divergence in the global macroeconomic landscape. Investment in emerging industries is unlikely to fully offset the demand slowdown in traditional sectors, and the dominant theme in the commodity market is shifting from "demand-driven" to a contest between supply and cost. With liquidity tightening at the margin and market volatility converging, it is imperative to closely track the evolving fundamentals across individual commodity sectors. For those seeking ongoing access to underlying data on crude oil and metals, subscribing to CME's oil and metals market reports—available free of charge—is a practical step toward sharper macro-level judgment.