Will cooling inflation mark the end of interest rate hikes? [Video]

There is no denying that August has started off with a bang – bring with it a series a of extraordinary money making opportunities from signs of cooling inflation, a brewing global debt crisis to the U.S being stripped of its triple A Credit Rating.

And just in case that wasn't exciting enough, traders are now on the verge of being gifted with even more lucrative money-making opportunities with Saudi Arabia determined to keep oil prices high enough to fund ambitious economic plans – all topped off with the most hotly anticipated event of all – the end of Fed's most aggressive interest rate hiking campaign in four decades.

Last week, rating agency Fitch surprised the markets by downgrading the U.S credit rating from AAA to AA+. This comes as successive standoffs over the nation’s debt ceiling and rapidly ballooning federal debt have cast doubt on the United States to meet all its payment obligations.

In Fitch’s view, the rating downgrade reflects the expected fiscal deterioration of the U.S in over the coming years. Their analysis suggests that Debt-to-GDP in the U.S is expected to rise from 98% of GDP in 2023 to over 121% of GDP in 2033 – reflecting weaker federal revenues, new spending initiatives and a higher interest burden.

As of today, the U.S holds more than $31.5 trillion in National Debt, which is just above the recently suspended debt ceiling of $31.4 trillion.

And the interest repayments on that debt are close to hitting $1 trillion for the first time ever in history. Put another way, that’s more than the U.S Education, Veterans' Benefits and National Defence Budget combined.

If the Federal Reserve continues to hike, that would ultimately increase the odds of a U.S debt crisis becoming the next big "black swan event".

Most economists have long felt that the Fed has gone one rate hike too far. Now with odds of a U.S debt crisis brewing on the horizon – an interesting debate is raging as to whether the Fed is done – or close to done with its rate hike campaign.

The answer to that question may come from the hotly awaited U.S Consumer Price and Producer Price Inflation figures, due for release this week.

Last month Consumer Price Inflation rose 3% on an annual basis, cooling from a 4% rise seen in May, while core inflation came in at 4.8% in June, down from 5.3% seen in May.

Those figures significantly boosted odds that the Fed’s recent 25 basis points rate hike is the last in this cycle.

A further easing in July will almost certainly cement the case for the Fed to hold off raising interest rates again in September, which as savvy traders know presents an extremely lucrative backdrop for Commodity prices.

Once again, the stars appear to be aligning for Commodities, which suggests that price could be on the verge of setting new record highs in the months ahead. That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: