Commodity Prices Increasingly Showing Signs Of Y/Y U.S. Inflation Peak

With the accelerated sell-off today, commodity prices are increasingly showing signs of U.S. inflation having "peaked". While energy prices remain 70% above their level a year ago, that's well off the doubled price level seen earlier this month.

• Agricultural commodity and retail gasoline prices, which never hit the heights of the commodities complex as a whole, appear to be rolling over.
• And on a year-on-year basis, industrial metals prices have fallen into negative territory over the past week.
• This is clearly translating into softening inflation expectations: 5Y TIPS-implied breakevens are now barely above where they were a year ago, and at 2.56%, are nearly 120bp below the March high.
• While there are plenty of other elements factoring into inflation concerns (services / rents), the sharp drop in commodity prices and the pullback in inflation expectations provides further evidence that we've seen a peak in inflation pressures.

Source: BBG, MNI Calculations