Falling commodity prices raise hopes that inflation has peaked
A slide in all manner of raw-materials prices -- corn, wheat, copper and more -- is stirring hopes that a significant source of inflationary pressure might be starting to ease. Natural-gas prices closed the quarter 3.9% lower, while crude slipped from highs above $120 a barrel to end around $106.
The most-cited word is that 2022 must be inflation, accompanied by rate hikes.
What is inflation? In economics, inflation refers to the general increase in the prices of goods and services in an economy over a certain period of time.
Inflation generally reduces the purchasing power of the public, thereby increasing the cost of living.
When inflation adversely affects people's livelihood and economic development, the Fed will try to raise interest rates to keep inflation at the desired level, during which time the stock market will be chaotic due to tightening monetary policy and rising borrowing costs for businesses.
Therefore, understanding inflation and developing a hedging strategy is very important for an investor's portfolio.
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