GLOBAL STOCKS REMAIN UNDER PRESSURE AS CRUDE OIL TESTS OVERHEAD RESISTANCE -- GRAIN PRICES ARE ALSO SURGING

WEST TEXAS CRUDE OIL REACHES 11-YEAR HIGH... The war in Ukraine continues to push oil prices sharply higher along with other commodities.   That includes metals and agricultural products.   Gold continues to gain ground as a traditional haven during times of rising inflation and increased global tensions.   Some defensive money is also moving into the relative safety of Treasury bonds.   That combination is keeping global stocks under pressure.  The main focus, however, is on the rising price of energy.   The monthly bars in Chart 1 show West Intermediate Crude Oil testing the previous highs set in 2013 and 2011 between $114 and $112.   The WTIC is trading today near $111.    Normally, it would be expected for the price of oil to stall near those previous highs.  But things aren't normal right now.   Even if oil were stall temporarily, expectations are for it to keep rising.    That would of course increase global inflation pressures.   Which will put even more pressure on global central bankers to start raising interest rates more aggressively to combat surging inflation.     The war in Ukraine is also pushing grain prices sharply higher.

GRAIN PRICES REACH MULTI-YEAR HIGHS... We normally don't place as much importance on the direction of grain prices.   But the recent surge to multi-year highs also holds bad news on the inflation front.  The next four  charts are plotted through Thursday.   The monthly bars in Chart 2 show the price of corn rising to the highest level in ten years.  While Chart 3 shows the price of wheat rising to the highest level since 2008.  Chart 4 shows soybeans testing their highs reached during 2012.   Those are big gains and carry bad news for food inflation.   What's even more disturbing is that the current surge in commodity prices is broad-based.

COMMODITY RALLY IS BROAD-BASED...The monthly bars in Chart 5 show the S&P GSCI Commodity Index (plotted through Thursday) climbing to the highest level in 14 years.   Rising commodity prices are usually a leading indicator of inflation which then flows into producer and consumer prices.   Today's charts suggest that inflationary pressures are going to get a lot worse.   And as one Fed official suggested this week, that inflation is likely to be with us for sometime.