Why commodities shine in a time of stagflation

Watching Jerome Powell testify before Congress on March 7th brought on an irrepressible sense of déjà vu. “The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” warned the Federal Reserve’s chairman. Recent economic data suggest that “the ultimate level of interest rates is likely to be higher than previously anticipated.” It is a message that Mr Powell and his colleagues have been repeating, in various forms, since the Fed started raising rates a year ago. As so many times before, markets that had lulled themselves into a sense of complacency took fright and sold off.