Perspective: Morning Commentary for April 18

By: Arlan Suderman, Chief Commodities Economist

Tue, 18 Apr 2023, 13:22

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 18 – Stocks again have a positive tone to them this morning, following better-than-expected economic data from China suggesting that its economy is recovering post-Covid. However, gains remain limited by lingering concerns about rising interest rates and the anticipated effect that will eventually have on the economy. The VIX fell below 17 this morning to trade at its lowest level in 15 months as Wall Street adjusts to its current challenges. The dollar index pulled back from the gains of the past two days to trade near 101.8. Yields on 10-year Treasuries traded near 3.60%, which is just below the 100-day moving average, while yields on 2-year Treasuries are trading near 4.20%. Crude oil prices are mixed at this hour, while grain and oilseed prices were mostly higher at the pause this morning.

U.S. housing starts came in at an annualized rate of 1.420 million units in March, up from analyst expectations of 1.400 million. However, the February number was revised to 1.432 million, down from the 1.450 million originally reported. Permits for new homes fell to an annualized rate of 1.413 million, down from analyst expectations of 1.441 million. February was revised to 1.550 million, up from the 1.524 million originally reported. In other words, the housing industry continues to see contraction due to high interest rates and consumer uncertainty about the future.

China’s gross domestic product grew 2.2% from the previous quarter and 4.5% year-on-year in the first quarter of this year, beating analyst expectations of 4% growth. China’s GDP grew 2.9% in the fourth quarter of 2022. Domestic consumption rose 5.8% year-on-year, which accounts for 40% of GDP in China. Investment was up by 5.1% year-on-year, and this sector accounts for 37% of GDP. Exports account for 20% of GDP, and they rose by 8.4% in the first quarter. Growth in exports was encouraging, considering a decline in demand for goods from the United States and from Europe. Today’s numbers raise optimism for the Chinese economy, which has positive implications for the global economy as well, providing tail winds for Wall Street overnight.

Retail sales jumped 10.6% year-on-year in March in China, up from a 3.5% rise in February, and above analyst expectations of 7.4%. Of course, year-on-year readings are going to be helped by the low base of year ago numbers during the Covid restrictions and lockdowns, but these are still good numbers. Today’s edition of China Direct, published by our Shanghai office, notes that retail sales for catering, clothing, and entertainment rose by 26.3%, 17.7%, and 15.8% respectively in March. First quarter sales data saw catering up 13.9% year-on-year, food, and beverage sales up 7.5%, clothing sales up 9%, and entertainment up 5.8%.

But areas of concern remain for China’s economy. Sales for higher-value goods continue to be soft. Auto sales fell 2.3% year-on-year, while home appliance sales were down 1.7%, and electronic sales dropped 5.1% year-on-year. Furthermore, investment in property dropped 5.8% year-on-year in March, after falling 5.1% in the first two months of the year. New construction was down 19.2% year-on-year in March, after falling 9.4% in February. That’s the 19^th consecutive month for a decline in new construction. Home sales continue to be sluggish in China following the pandemic, while investment by the private sector was only up 0.6% year-on-year. Overall, the data shows that the private sector remains cautious, while state-owned enterprises are responding to government-led investments. The consumer is increasing spending on small-ticket items, but also lacks the confidence in the recovery to invest in big-ticket items. That should cool any euphoria for the Chinese economy recovery and keep traders cautious.

Russian officials again blocked inspection of ships moving through the safe corridor as part of the Ukraine grain initiative. It’s the second time in as many weeks that movement has been halted, although Russia continues to blame it on others. The Joint Coordination Center institutes a coordinated plan for the inspection of ships moving through the corridor, but Russian inspectors decided to randomly pick ships of their choosing, causing everything to come to a halt. Russian inspectors, without explanation, have refused to register three ships since April 14 that were attempting to move toward the Port Pivdenny to load grain, with two of them having China as their final destination. This combines with ongoing resistance by Eastern European countries bordering Ukraine to allow grain to continue flowing across their borders.

The trade always expects these obstacles to be worked out, but it increasingly must deal with the possibility that grain flow out of Ukraine may become much more restricted in the months ahead, further tightening global supplies of corn and wheat. This comes at a time when speculative fund managers hold large short positions in Chicago wheat, and at a time when U.S. hard red winter wheat supplies are being threatened by a historic drought in the Central and Southern Plains. It also coincides with China currently on a buying spree to rebuild its feed grain reserves. Follow the money in the near-term, which is largely taking its clues from chart signals and perceptions about old-crop supplies.

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Perspective: Morning Commentary for August 7

August 7 – The U.S. economy unexpectedly lost 23k jobs in July, dramatically below market expectations of an 80k increase and marking the worst Non-Farm Payrolls print since February. Furthermore, May and June were both revised sharply downward, with combined revisions showing 103k fewer jobs than previously reported. Outside of the healthcare sector, which added 22k jobs in July, the losses were very broad-based. Government payrolls saw the largest decline, shedding 53k jobs in July, the largest seen since October 2025, while June was revised down to show a loss of 10k jobs as well. The private sector at least saw growth, adding 30k jobs in July, now matching the month prior after it was revised down from the 49k initially reported, and substantially missing forecasts of 78k jobs being added. This is a sharp reversal in course from the largely better than expected U.S. labor data seen earlier this week.

Mike CastleFri, 07 Aug 2026, 13:26

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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Perspective: Mid-Day Commentary for August 5

August 5 – The Dow Jones is ripping higher for yet another session, up safely over 500 points at the time of this writing to carve out another record high; the S&P and NASDAQ are a bit less enthusiastic but the former is still making its own record high, while the latter is less than 500 points off its own top thanks to a strong ongoing week of trade. The dollar is churning lower this morning in an effort to re-test Monday’s 1 ½-month low, while the ten-year note has flipped higher in the mid-morning hours. The CME FedWatch tool interesting has market odds of a quarter-point rate hike next month coming closer to a 50-50 proposition as crude oil prices decline.

Mike CastleWed, 05 Aug 2026, 15:19

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