The chart above is the Consumer Price Index for All Urban Consumers, and reflects that inflation is historically high. The Fed has been trying to get a handle on the inflation problem, but the graph seems to illustrate that inflation may not be contained.
The Fed has had to act. In increasing interest rates, the economy, though, has slowed down.
Also, commodity prices have been increasing since 2019 due to global demand and changing supply dynamics. Historically, commodity markets experience price volatility.
These same factors have increased agricultural commodity prices in recent weeks. The grains appear to be slowly starting to recover in price from a previous rebound earlier this year.
Grain prices are now rising due to strong global demand for these agricultural commodities and a lack of supply, due to adverse weather conditions, from droughts to floods to the Ukraine conflict. This new demand should lead to continued strength in agricultural commodity prices over the coming months.
It’s important to remember that commodity markets are incredibly volatile and can change rapidly, so we advise actively managing commodities in your portfolio.
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Inflation has ebbed but not disappeared, so why should the Fed’s new policy? See Mish consider this question on Coast to Coast with Neil Cavuto.
Drought and more inflation is in store, with good technical levels in many raw materials holding. Mish talks commodities in this discussion with Nicole Petallides of TD Ameritrade.
- S&P 500 (SPY): 410 pivotal support, 397 major support, 423 resistance.
- Russell 2000 (IWM): 190 pivotal support, 180 major support, 199 resistance.
- Dow (DIA): 339 resistance with 319 major support.
- Nasdaq (QQQ): 312.50 pivotal support, 301 major support and 325 resistance.
- KRE (Regional Banks): 65.00 support, 68 resistance.
- SMH (Semiconductors): 222 the 50-DMA support, over 240 better.
- IYT (Transportation): Through 243 better and must hold 225.
- IBB (Biotechnology): 123 the 50-DMA support to hold.
- XRT (Retail): 67.20 must hold on a weekly close. If not, looking at 65.00 next.
Director of Trading Research and Education