The reflation trade is fading. Here’s what to avoid, and where to seek refuge, in commodities.

Slumbering markets seemed to have woken up this week, and not in a particularly good mood.

It’s true that the S&P 500 SPX, 0.65% on Thursday did manage a rise, barely. Small-caps RUT, 0.33%struggled, the dollar DXY, 0.04% reached a nine-month high (and lodged a new one on Friday), and bonds remain in demand. The VIX VIX, -8.63% volatility measure had jumped 40% this week, and is surging again.

Tom Price, head of commodities strategy at U.K. brokerage Liberum, said there are three factors contributing to what he says is the end of the reflation trade.

The first is the Federal Reserve’s planned tapering of its bond purchases this year, which created upside risks for inflation-adjusted rates and the dollar, and downside risks for globally traded commodities. Another is China’s continued actions to restrict domestic activity, including credit controls, property taxes and the release of strategic stockpiles, that he said is intended to reduce growth to between 6% and 7%, from 8% in the second quarter. And finally, there is the coronavirus, with the delta variant impacting the U.S., Australia and other countries.