6 November 2025
Commodities signal manufacturing slowdown, bad weather increased utility bills in the US and private equity finding its footing again
Summary
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In summary:
Commodity prices point to a manufacturing slowdown.
Industrial commodity prices have seesawed since the escalation of trade tensions in April 2025 as investors weigh weakening demand against supply disruptions. While gold prices have been surging amid growing uncertainty, oil prices have sunk -14% in the first nine months of 2025 because of oversupply and weak demand. OPEC+ has paused planned output hikes for early 2026 to avoid a price collapse but with output still high and consumption limp, we expect Brent crude to average USD69/bbl in 2025 (down from USD81/bbl in 2024) and in the current environment, there are risks to downside to our USD66/bbl forecast for 2026. Meanwhile, copper prices have bounced back after the "Liberation Day" shock (+25% ytd, back above USD10,000/ton) as a series of mine disruptions tightened supply. Higher copper prices are in turn raising aluminum prices as sectors such as automotive increasingly shift to using the cheaper metal – despite its lower conductivity. Overall, current metal prices suggest that industrial production “should” be 2% to 10% lower than current levels. We expect a modest +3% rise in base metal prices for 2025 while global industrial production should slow down to +2% y/y (down from +3% in 2024).
US electricity price surge: Mostly weather and the aging grid (and not so much AI) to blame.
American electricity bills are climbing at a fast pace (+4.2% y/y, January-September, nearly 1.5pp above overall inflation). But the AI boom and energy-hungry data centers are not to blame. In Virginia, the largest data center hub, a +14% demand surge coincided with only a 1 cent/kWh increase in electricity prices. The real culprits are frequent extreme weather events, which are forcing utilities to spend billions on repairs to restore services, and the enormous ongoing capital investment cycle to renew America’s aging electric grid. In 2025, capital spending should reach USD209bn, nearly double what it was a decade ago. While these investments improve reliability and enable growth, they unavoidably push rates higher in the near term. Based on implemented or proposed price hikes by over 60 utility companies (covering over 83mn customers), we estimate that the average US household should or is already facing an average increase of close to USD12 per month in their electricity bills, which could increase US CPI by +20bps by end-2026.
Is private equity finding its footing again?
Global deal-making accelerated in 2025, with Q3 marking the busiest period since 2021 and large transactions dominating once again. Confidence is cautiously returning across the US and Europe as valuations have stabilized and portfolio performance remains solid. We expect returns to remain at around 10% for PE buyouts through 2026 and 2027, supported by steady economic growth, low borrowing costs and healthier public equity valuations, which keep IPOs and exits within reach. But liquidity remains the primary constraint. Distributions to investors are lagging, and fundraising has slowed for a third consecutive year. The stock of uninvested capital, which has long served as a safety cushion, is now beginning to shrink. To bridge this gap, managers are turning to continuation vehicles and NAV-based financing, innovations that keep capital flowing even as traditional exits remain scarce. The result is a more deliberate and disciplined cycle. All in all, private equity is moving forward again, but with greater patience, balance and focus on long-term value creation.
Authors
Nils Bradtke
Allianz Investment Management SE
Ano Kuhanathan
Allianz Trade
Allianz Trade