September 21

9/21 – WEEKLY COMMODITY SUMMARY:

• Last week, the Federal Reserve unanimously raised its benchmark interest rate by 25 basis points to a range of 3.75-to-4.00%. It was the first rate hike in 3 years. While the move was overdue economically, it was a bit of a surprise politically given that new Fed Chair Kevin Warsh is under pressure from President Trump to lower rates.

• Inflation is accelerating. August’s Consumer Price Index was 3.4% above a year ago. August gasoline prices were 27.4% higher than last year and fuel oil (home heating oil & diesel) were up 52.0%. Big increases for high profile items like ground beef, coffee, and utilities have consumers particularly upset. As long as fuel prices remain elevated, costs will be amplified at every level of the supply chain.

• The Fed’s preferred inflation gauge, Personal Consumption Expenditures, was up 3.7% in July, far exceeding their 2% inflation target. Look for at least one more rate hike before year’s end.