Commodity prices have been on a phenomenal run this quarter breaking records and notching up fresh highs. But as the quarter comes to a close prices are finally undergoing the usual pullback as trader’s bank profits and assess the markets next big move.

Last week the Federal Reserve and its central-banking peers upped their game on inflation by unleashing four days of rate hikes – nicknamed “The Rate Hike Extravaganza”.

In one of the most sudden shifts in global economic policymaking seen in decades, central bankers launch a co-ordinated assault on inflation – delivering an historic tally of interest-rate hikes totalling more than “700 basis-points combined”, within a single week.

The Swedish Riksbank kicked off the action on Tuesday with a mammoth 100 basis point rate hike, its biggest interest rate increase in three decades. On Wednesday, the U.S Federal Reserve announced a third consecutive 75 basis point rate hike – taking its benchmark lending rate to a new target range of 3%-3.25%. That's the highest since the global financial crisis in 2008.

Elsewhere, Switzerland, Saudi Arabia and the UAE also played copycat with their own 75 basis point rate hikes, which for Switzerland meant ending the period of negative rates that started in 2015. The Bank of England on Thursday raised interest rates by 50 basis points to 2.25% – the highest since the global financial crisis, with a firm promise of further rate hikes to come. Even in Japan, which has long adopted negative interest rates, felt it was now or never to jump on the rate hike bandwagon.

Perhaps the most important take away from this round of rate hikes – was the “like for like” economic projections put out by the Fed and its global peers – stating that “inflation is likely to accelerate further before it begins to moderate”.

The hard fact is that as long as we have interest rates below the inflation rate, even if they’re higher, they’re still negative – and negative interest rates put upward pressure on inflation. Ultimately, you can’t fight inflation with negative interest rates. That’s like trying to put out a fire with gasoline!

Surprisingly, this is something central bankers still don't seem to have figured out, which is leaving them spinning their wheels and hardly even getting close to bending the curve on inflation.

Historically, the Federal Reserve and its peers have never been right on monetary policy and have a proven track record of setting the economy up for an even bigger crisis.

Only time will tell if global policymakers are right this time around, or on the verge of yet another a major policy error.

However, the one thing we do know is that extraordinary times create extraordinary opportunities and right now, this market is a traders dream – packed with unlimited money-making opportunities to capitalize on the short-term macro-driven volatility!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

 

Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD falls below 1.0500 after US NFP data

EUR/USD falls below 1.0500 after US NFP data

EUR/USD dropped below 1.0450 but managed to stage a modest rebound. The US Dollar preserves its strength against its rivals and doesn't allow the pair to gain traction after the data from the US showed that Nonfarm Payrolls rose by 263,000 in November.

EUR/USD News

GBP/USD turns south on upbeat US jobs report, trades below 1.2200

GBP/USD turns south on upbeat US jobs report, trades below 1.2200

GBP/USD lost nearly 100 pips with the immediate reaction to the upbeat November jobs report from the US and broke below 1.2200. The US Dollar Index clings to strong daily gains above 105.00 after the data showed that Nonfarm Payrolls rose by 263,000.

GBPUSD News

Gold retreats below $1,790 as US yields surge on US NFP

Gold retreats below $1,790 as US yields surge on US NFP

Gold price turned south and dropped below $1,790 in the early American session. The benchmark 10-year US Treasury bond yield is up more than 2% on the day near 3.6% after the bigger-than-expected November job growth, weighing heavily on XAU/USD.

Gold News

FTX exchange collapse, loss of $3.1 billion could have been avoided on one condition

FTX exchange collapse, loss of $3.1 billion could have been avoided on one condition

FTX exchange, founded by Samuel Bankman-Fried (SBF), has consistently made headlines over the past month for its liquidity crisis and triggering a collapse in the crypto ecosystem.

Read more

AMC advances more than 3% in premarket day after being halted

AMC advances more than 3% in premarket day after being halted

AMC stock is up 3.4% in Friday's premarket just a day after authorities halted trading due to unusual volatility. Thursday saw options volume three times higher than the 20-day average.

Read more

Majors

Cryptocurrencies

Signatures