October 3, 2022


Enduring Values

Commodities Are Slumping. Here’s What It Means for Inflation.

It’s Friday, readers. Phil Rosen here, reporting from New York. Gloom pervades global markets this morning, following the death of former Japanese prime minister Shinzo Abe, who was shot while giving a speech in the city of Nara.

In today’s newsletter, we are also covering the indicators that suggest soaring prices are coming back down to earth. 

Commodities markets in particular are suggesting inflation may finally be abating. But as is often the case in these wild markets, it’s a double edged sword. 

Let’s have a look. 

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Food inflation

The drop in commodities has raised hopes that inflation will start to cool.

SolStock/Getty Images

1. Commodity prices have plunged back to pre-Ukraine war levels. And that has raised hopes that inflation might be fading

This week, oil prices slipped to four-month lows, copper plunged 30% from recent highs, and wheat has cratered 40%. 

The S&P GSCI commodities index dropped to 664.15 on Wednesday — which is where it stood before Russia invaded Ukraine in February. However, it did rebound 5% Thursday to 694.34.

And traders are reacting accordingly. They forecasted inflation to average just 2.5% over the next five years, down from the 3.7% expectation reported in March. 

But the drop is a double-edged sword: Investors are shedding commodities because they anticipate slow or even backwards economic growth, and banks are expecting a wave of recessions around the world. 

Nobel Prize-winning economist Paul Krugman, for his part, said fears of runaway inflation are hugely overblown, and dismissed stagflation concerns too. 

“Not sure people realize how dramatically the runaway inflation narrative has now collapsed,” he tweeted on Wednesday. “Market expectations are way down.”

You can listen to me talk about oil prices on today’s episode of The Refresh from Insider

Today’s top stories

Former Japanese prime minister Shinzo Abe.

Former Japanese prime minister Shinzo Abe.

Tomohiro Ohsumi/Getty Images

2. The death of former Japanese prime minister Shinzo Abe shocked markets early Friday. Abe, who was aged 67, was the country’s longest-serving prime minister until he resigned in 2020. You can read more about Abe’s legacy here — and the latest market moves here

3. On the docket: Tata Consultancy Services Limited, Goodman Property Trust, and Wakita & Co, all reporting. Plus, keep an eye out for non-farm payroll data due out today at 8:30 a.m. ET.

4. A father who retired at 36 after amassing $1.28 million explained how he made it happen. He said investors should consider certain asset classes, types of accounts, and allocation rates when making money decisions. He shared his top seven investing tips for retiring early.

5. The chief of the IMF predicted that global growth is going to face a harder and harder road ahead. “It’s going to be a tough ’22, but maybe even a tougher 2023,” IMF boss Kristalina Georgieva told Reuters. She cited pervasive high inflation, big interest rate hikes, and increasing Russian sanctions — and added that she couldn’t rule out a recession

6. Elon Musk’s $44 billion deal to buy Twitter is “in peril.” That’s according to The Washington Post, who spoke with three sources who say the takeover is facing “serious jeopardy.” Following the report, Twitter stock dropped 4% in pre-market trading.

7. China is considering having local governments fast-track the sale of $220 billion of bonds for the first time, Bloomberg reports. Rather than wait for 2023 to begin, the bonds would be sold during the second half of 2022. The stimulus would come as China’s economy has struggled to keep apace with its 5.5% annual growth target.

8. Top industry experts debate whether Phoenix’s lofty home valuations are justified. Real estate and money pros disagree on the future of the Phoenix real estate market and if it has hit its pandemic ceiling or not. Plus, they discussed if there’s a housing correction on the horizon for the Valley of the Sun.

9. This 57 year old went from painting in prison to becoming a prominent NFT artist. After picking up art while spending 13 years in prison, Maryanne Chisholm turned to minting digital assets — and she’s brought in six-figures worth of sales.

Bed bath & beyond stock

Markets Insider

10. Bed Bath & Beyond jumped 24% Thursday as the interim CEO snapped up $230,500 worth of shares. The struggling retailer’s chief executive raised her holdings in the company by 90%, with other insiders also buying more shares. Dig into the details here.

Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.

Curated by Phil Rosen in New York. (Feedback or tips? Email [email protected] or tweet @philrosenn).

Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.