The FT notes that:
- Oil touched an all-time high at the end of last week, reaching $80.36 at one point, as traders reacted to last week’s OPEC decision to raise crude output by 500,000 barrels a day from November as “too little, too late”;
- Wheat hit a record last week as well, making it to $9.11¼ a bushel on Wednesday after the US Department of Agriculture warned that global stockpiles would shrink to a 30 year low;
- Corn prices were still going up last week even after USDA forecast a record US crop, thanks to the global explosion in corn consumption – for biofuels as well as food; and
- Gold touched $717 a troy ounce, a 17 month high, on Friday – driven by investors going for safety and a predicted further weakening in the dollar.
Most media commentary over the last week has suggested that US, eurozone and UK interest rates will decline as central banks seek to inject liquidity to the markets. But if real world scarcity trends in agriculture and energy keep pushing raw material prices upwards, then that could make for a painful countervailing force on interest rates – putting central bankers between a rock and a hard place on growth versus inflation. Stagflation, anyone?
