Inflation Hawks: Mugged by Reality, Again

Written by David Frum on Tuesday October 4, 2011

Remember how the Fed's easy money stance was supposed to drive commodity prices higher and higher?

Ooops.

S&P GSCI Index dropped 24% since April, signalling a bear market

4 Oct, 2011, 0506 hrs IST, Bloomberg

LONDON: Commodities fell to a 10-month low as signs of a contraction in European manufacturing signalled slowing demand for raw materials.

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"Deteriorating leading economic indicators point to commodity demand risks," H Fraser Phillips, an analyst at RBC Dominion Securities in Toronto, said in a presentation in London on Monday. "A significant slowing in global economic growth could lead to a weakening in commodity demand in the near term."

The S&P GSCI Index has dropped 24% since April, meeting the common definition of a bear market.

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Crude oil for November delivery fell 1.3% to $78.15 a barrel on the New York Mercantile Exchange. The fuel lost 17% last quarter. Copper dropped 3.6% to $6,764 a tonne in London, after losing 26% in the third quarter.