As Americans continue to argue over inflationary impacts of reciprocal tariffs on major trading partners from the Trump administration, one thing remains clear, price of certain hard and soft commodities continue to trend downwards.
The spot price of orange juice is down more than 38% from where it was a year ago today and the spot price of oil is down more that 28% over the same time period. The spot price of brent crude is down close to 7% as of Friday’s closing. Oil is now trading just above $62 a barrel. This doesn’t portend good things for the markets in the coming months, as the futures markets seem to be anticipating a significant slow down in the economy. Lastly, rates on the 10-year USTs has also been trading downwards towards the 4% mark. If that’s the case, then the bond market doesn’t seem to buy the inflation narrative from mainstream talking heads.
To be clear, we’re not claiming that the price of peanut butter won’t go up. It may very well do so. But we’re also not claiming that hyperinflation is about to kick into high gear and bring about “fire and brimstone” to capital markets.
As Americans, we’ve replaced baseball with “pissing and moaning” as our national past time. Market participants need to develop some perspective. Besides, we’ve contended with high inflation rates. Remember the over 9.0% inflation rate that we’ve suffered through not that long ago because both Trump’s and Biden’s insistence on directly depositing cash into people’s bank accounts. We all managed to survive. Let’s take comfort in the fact that oil is trending lower and that we may be afforded some respite at the pump in the coming months. Just in time for this year’s busy travel season
The national average is currently at $3.62 per gallon, according to AAA. Below is an interactive map of average gasoline prices across the nation in all 50 States. Click on the state you’re particularly interested in. If you don’t live in the state of California, which currently has the highest gasoline prices across the land, give yourself another reason to smile.
Figure 1: Average gasoline prices in the US (Interactive Map)
Lastly, it’s important to remember that deflation and inflation are not mutually exclusive events. It’s a spectrum and we end up going back and forth within that spectrum in the current economic regime. So our recommendation is to relax, this too will pass. Stay locked in with your head on a swivel and look for opportunities.
Until the next post, invest wisely, invest soundly, and invest boldly.
Disclaimer: This post is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult with a financial advisor before making investment decisions.
