I certainly believe they have. Price action speaks to this. The Wall Street Journal’s Market Beat had this quote about the price action in commodities:
The price of many commodities and commodities stocks — from gasoline to coal to fertilizer makers — rode up on the coattails of crude oil. So oil’s moves are pivotal. Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, said there’s good reason for a technician to believe oil’s retreat will continue in the near term.
“Since the peak, the down days have been on really heavy volume,” Detrick said. “The only day we had a bounce since the peak on July 11 was on July 21, and that was a very light volume day. You can almost make that statement for all commodities. There’s been a bounce here and there, but the selling without question has come on higher volume.”
–Market Beat
Ultimately, if oil continues to lead the rest of commodities lower (see the U.S. oil fund ETF above), this will be a huge shot in the arm for the global economy. It will certainly get the U.S. Federal Reserve off the hook, as accelerating consumer price inflation was constraining policy action. But, more than that, a decline in commodity prices would offer relief to consumers squeezed by higher inflation and deflating asset markets. And it just may end up leading to a milder downturn.
Related articles
Commodities boom may be coming to an end: economist, National Post, 23 Jul 2008