Are Inflation Indicators Topping Out for the Summer?
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If the quote "Bottoms are events and Tops are a process" has any merit, what takes place very soon in the CRB/CRX indexes should tell us a ton about what will happen on the inflation front between now and the end of the year.
The Commodity Research Bureau Index (CRB) hit its 61% Fib resistance level last May and has created a series of lower highs since. Global economies have followed the CRB's lead. So goes the CRB so goes Global growth?
Now the CRB is back at falling resistance as well as the MS Commodity Index (CRX) and the AU$/US$ ratio.
On 7/31 the Power of the Pattern reflected that despite a serious drought, Soybeans and Wheat looked to be creating tops as well. (See white hot grains ready to cool off.)
For sure we are seeing inflation pressures in the grocery store. Keep an eye on these three inflation indicators though to see if inflation is peaking at this time.
If these inflation tools would happen to break out, bonds could see a big price adjustment due to the patterns in place plus sentiment conditions! (See where did the bond bears go?)
What happens on the inflation front here will have significant implications for portfolio construction in the months to come.
(c) Kimble Charting Solutions