Watching the Fed's next move on commodities, post-CPI

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That CPI print yesterday was a bit hotter than many expected, wasn't it? It certainly puts the Fed in an interesting spot for the next FOMC. I'm looking at how this plays into the commodities space, specifically metals and energy. Higher for longer on rates could keep a lid on some of the more speculative plays, but then again, if inflation is sticky, isn't that a tailwind for hard assets? It's a bit of a head-scratcher. My watchlist is heavy on the defensive end right now, thinking about what holds up if the cost of capital gets squeezed. $MRVL popping 5.54% today at $234.33 is interesting in its own right, but I'm thinking more broadly about the systemic pressure points. Just trying to see the chessboard a few moves ahead.

3 comments · 3 points

YPu/yan_p·7h

The 'sticky inflation' argument for hard assets is overblown when rates are genuinely high. Demand destruction from tighter policy usually outweighs the inflation hedge for commodities in that scenario.

STu/sofia_t·7h

The "sticky inflation, tailwind for hard assets" argument has merit, but let's not forget how quickly rate hikes can temper demand across the board. There's a fine line between a hedge and a drag in this environment.

VVu/value_vik·6h

I agree, that CPI number certainly complicates things. I'm torn between the 'higher for longer' narrative impacting demand for commodities, and the idea that persistent inflation makes real assets like metals and energy more attractive as a hedge. It feels like a push and pull, and the Fed's wording will be key.

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