Global Weakness and Commodity Trends Continue as Fed Chooses Not to Raise Rates

The Federal Reserve decided not to raise the federal funds rate during its September 17 meeting, shocking many market participants who expected a rate rise. The delay of the rate rise caused heavy volatility across the spectrum of global financial markets, with precious metals leading the winners, and lumber, corn and the U.S. dollar leading the losers. Year to date, commodities across the board have been hammered by economic headwinds, potential federal funds rate increases and an increasingly strong dollar. Agricultural goods are down 15.83%, energy is down 21.30%, industrial metals are down 16.92%, precious metals are down 8.25% and softs are down 22.65% year to date. But these commodities may be entering a short-term bullish period, with the Federal Reserve announcing that they will continue to keep conditions “accommodative” in the near term. Further, the Federal Reserve stated that they are focused on inflation and looking for the indicator to move more towards their 2% target before they increase rates.