Perspective: Morning Commentary December 9

By: Arlan Suderman, Chief Commodities Economist

Tue, 09 Dec 2025, 14:33

December 9 – Stock futures are quietly mixed this morning as the Federal Open Market Committee of the Federal Reserve begins two days of meetings to evaluate current monetary policy. Wall Street is fixated on monetary policy – not only here, but patterns evolving around the globe. The VIX is trading near 17 this morning, while the dollar index trades near 99.2. Yields on 10-year Treasuries are trading near 4.16%, after hitting a 10-week high above 4.19% on Monday, while yields on 2-year Treasuries are trading near 3.57%. Crude oil prices were trading modestly weaker this morning, as they continue to trade largely between $58 and $60 per barrel, while the grain and oilseed sector was mixed to weaker ahead of today’s USDA WASDE crop report.

The CME FedWatch this morning gives 87% odds that the Federal Reserve will cut interest rates by another 25 basis points when it concludes its meetings tomorrow. That’s the expectation that has been priced into the market. But this won’t be an easy rate cut for the Fed, if it happens. The debate inside the board room is expected to be intense, with some arguing for more aggressive cuts – maybe even up to 50 basis points – while others argue that it would be more appropriate to hold policy where it is. Pressure from the White House to cut rates is certainly seen, and of course, FOMC members hear the bias of everyone from businesses to their next-door neighbors who would enjoy lower rates. Yes, there are indications that the labor market is soft, but new stimulus measures via the “One Big Beautiful Bill” also kick in on January 1, and some of the softness in the labor market is due to immigration policy and Trump policy uncertainty, which could also stabilize as we approach next year’s mid-term election. M2 money supply is near record high levels, and the Fed’s own GDPNow forecast tool is calling for growth of 3.5% in the current quarter. If the Fed does cut its benchmark rate tomorrow, the compromise within the boardroom may be that it will be accompanied by a hawkish statement hinting that it may be the last cut for a while.

Rates were pushed higher on Monday by a global bond selloff as investors worried that perhaps we’re nearing the bottom of the rate cycle. Australia’s central bank held rates steady when it met today, ruling out further policy easing in the near-term, and even warning that rates could push higher if inflation remains sticky. The Bank of Canada and the Swiss National Bank are both expected to hold rates steady when they meet on Wednesday and Thursday respectively. The European Central Bank doesn’t meet until next week, but one of its influential members, Isabel Schnabel, stated this week that the central bank’s next move might be higher rates. Japan is debating higher rates as well, due to rising inflation, although its economy is stagnating, creating some challenges there as well. President Trump is expected to soon name his nominee to replace Fed Chair Jerome Powell in May, and it is expected to be someone favoring more rate cuts. That is expected to change the dynamics of the conversation in the FOMC as well. We may see the greatest focus on Fed meeting minutes that we’ve seen in many years going forward, although those minutes are not released until several weeks after the meeting.

Chinese stocks slipped lower today in response to comments emerging from the December Politburo meeting. Authorities put more emphasis on coordinating fiscal and monetary policy, using a mix of existing tools and incremental tweaks, rather than broad-based stimulus. They spoke of “cross-cyclical adjustment,” which communicates to the market that authorities are moving away from frequent interest rate cuts or bank reserve requirement reductions, while putting greater emphasis on structural tools targeting specific sectors and credit channels. There’s a clear focus on increasing domestic consumption as China tries to make the very difficult shift from an export-based economy to a consumer-based economy, which is what we have here in the States. That’s difficult to do anyway, but it’s even more challenging when consumer confidence is just above record lows due to the country’s lingering property problem. Domestic retail car sales were down another 1.1% on the month in November, and down 8.1% on the year, and this was one of the targeted subsidized areas.

Argentina cut its export taxes on many agricultural commodities today. The export tax on soybeans will drop 2 points to 24%, while soybean byproducts will also drop 2 points to 22.5%. Wheat export taxes drop 2 points to 7.5%, while corn and sorghum falls 1 point to 8.5%, and sunflowers drop 1 point to 4.5%. Argentina hopes to continue dropping its export taxes as economic growth allows until it can get these taxes down to zero. Doing so would be expected to increase the competitiveness of Argentine agricultural exports on the world market, further undercutting U.S. exports while stimulating greater production via higher profits to farmers there. We got a taste of that earlier this fall when Argentina implemented a short export tax holiday, resulting in China aggressively buying Argentine soybeans at the expense of U.S. demand. For today, the focus will be on USDA’s WASDE crop report, with particular focus on what the agency does with its domestic corn and soybean export targets.

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Matt ZellerMon, 03 Aug 2026, 12:45

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