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US inflation rate came at 7% yesterday, that is 7% erosion in purchasing power since December 2020! In these inflationary periods, one effective way to hedge against inflation is through investment in real assets, like commodities. The Bloomberg commodities index (ticker: DJP), a broadly diversified basket of energy, grains, industrials and precious metals, and life stocks, had a stellar performance in 2021. The ETF outperformed the S&P 500 last year, yielding 31% return. As it is expected that inflation will remain above 3% through 2022, commodities are very likely to continue to outperform. Moreover, weaker US dollar and increasing geopolitical uncertainties have always pushed prices of this asset class higher.

Oil prices were down more than 1% to below $76 a barrel, reversing gains from the previous session, as the US is expected to announce Tuesday a release of its emergency oil reserves in a bid to lower high prices. The move will be coordinated with other countries including China, Japan, and India which are allegedly working on ways to release national crude oil reserves.

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This news comes despite pressure from the US to raise production by as much as 800,000 barrels a day. After rallying to 7-year highs at near $86 in the last week of October, WTI crude has been shaken by an unexpected build up in US crude inventories. Source: Bloomberg, TradingEconomics

A significant metal deficit projected for Q4, globally visible copper stocks could reach all-time lows by year-end and absent market adjustments driven by higher price could deplete by Q2 of 2022. This chart shows copper against the DXY inverted. A small pause in the DXY as we have been witnessing could see copper more dynamically shift to the upside.