Commodities Signal Shift: Sector Setup for Fed Week!
From The Trading Desk at Stipelis
The Macro View
For Monday, October 27, 2025
Markets are entering a pivotal week. With the FOMC rate decision, Q3 GDP, and PCE inflation data on deck, macro signals are already flashing rotation. Today’s action shows strength in natural gas (+3.36%), heating oil (+2.76%), soybeans (+2.18%), and wheat (+2.98%)—all breaking 4-week highs.
Meanwhile, silver (-4.98%) and gold (-3.42%) are pulling back, suggesting a short-term pause in metals despite their strong YTD performance. Gold remains up 56.68% YTD, but today’s weakness may reflect profit-taking ahead of the Fed.
The U.S. Dollar Index is flat today but remains down 8.82% YTD. A falling dollar is historically bullish for commodities, especially ags and energy. Bonds are also down today, with the 10-year note slipping 0.18%. This aligns with the macro rule: falling bond prices and rising interest rates support commodity strength.
Equities are still climbing, with the Nasdaq 100 and S&P 500 E-mini both breaking 4-week highs. But the bond market often leads equities in directional shifts. With the Fed expected to cut rates again this Wednesday, the setup favors inflation-sensitive assets.
Forecast:
Focus on agriculture and energy. Wheat, soybeans, and heating oil are showing breakout momentum. Natural gas and gasoline are also strong. These sectors are likely to benefit from continued dollar weakness and rising rates. Metals may consolidate short-term but remain a longer-term hold.
This week’s economic calendar is packed:
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- Wednesday: FOMC rate decision and Powell’s press conference
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- Thursday: Q3 GDP (expected 3.8%) and jobless claims
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- Friday: PCE inflation and employment cost index
If the Fed cuts rates and inflation remains sticky, commodities could surge. Positioning ahead of these releases is key.
Stephen Coleman
Commodity Trading Advisor