Worries the U.S. recovery may not be as strong as expected signaled to many investors it was time to re-price oil for lower demand, and other commodities followed suit.
All in all, it looks as if Bernanke’s oft-repeated view that the commodities surge, driven by supply shocks, political forces and overseas growth, may indeed be “transitory.”
But why, exactly, is this such a surprise?
Some of this probably represents a long-term upward trend, as emerging economies place pressure on limited resources, but even so, you wouldn’t expect continued rapid rises, and in fact you should expect some regression toward normal levels as supplies and to some extent demand respond.
Well, the San Francisco Fed tells us that commodities account for only about 5 percent of personal consumption…
A naive observer might note that interest rates are low by historical standards, making you wonder why we’re obsessing about the bond market; that inflation is also low by historical standards, making you wonder why it’s an issue at all; and that unemployment is immensely high. But Washington has its priorities.
Runaway inflation! Or, maybe, not.