By Walter Kurtz, Sober Look
The CRB commodities index broke through the apparent support level discussed earlier. Commodities continue to be pressured by the global slowdown and Eurozone driven market stress. Recent dollar strength also added momentum to the selloff.
|CRB Commodities Index|
With the correction in the commodities markets, US dollar inflation expectations are down sharply. The 2×2 (two-year forward) TIPS implied inflation measure went from some 2.25% in March to under 1.5% now. As long as Europe continues to flare up and commodities are under pressure, inflation expectations should stay subdued.
|2×2 TIPS implied forward inflation expectation|