Perspective: Morning Commentary for August 18

By: Arlan Suderman, Chief Commodities Economist

Thu, 18 Aug 2022, 13:31

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 18 – Stock futures pushed quietly higher overnight ahead of this morning’s weekly jobs data, and they are now trying to defend those gains following the data release, while also digesting the minutes of the latest Federal Reserve meeting that were released on Wednesday. The VIX continues to consolidate near 20 this morning, while the dollar index is trading near 106.7. Yields on 10-year Treasuries are trading near 2.87% this morning, with yields on 2-year Treasuries trading near 3.24%. Crude oil prices are 1% higher as they consolidate below $90 per barrel, while RBOB gasoline prices are consolidating below $3.00 per gallon. Grain and oilseed prices slid modestly weaker overnight.

First-time claims for unemployment benefits slipped to 250K in the week ending August 13, falling below analyst expectations of 265K. The previous week’s total was revised to 252K claims, down 10K from what was reported last week. This puts the four-week moving average at 246.75K, down from 252K the previous week. Continuing claims rose another 7K in the week ending August 6, rising to 1.437 million. That’s still just above historical lows, but the trend is rising. A softening jobs market is one of the factors that needs to happen in order to ease wage inflation pressures that are contributing to the overall inflation numbers, although few policymakers want to discuss that.

The Philadelphia Fed manufacturing index for August is 6.2, up from a minus 12.3 the previous month, and better than analyst expectations that it would come in at minus 5. A number above zero indicates growth, while a number below zero indicates contraction. Analysts were holding their breath on this one after the Empire State index showed sharp contraction this month. There was little in this report to suggest strength for the Philadelphia district, but the data did suggest that the region is starting to see some stability, with 28% of the surveyed firms reporting rising employment, while just 4% reported lower employment.

The Federal Open Market Committee released the minutes of its late July meeting Wednesday afternoon, providing a bit of a wake-up call for the markets. Conversation in the Fed policy meeting room centered around the fact that policymakers still saw few if any signs that inflation had abated. Treasury yields rallied following the release of the minutes on expectations that the Fed would maintain its aggressive hawkish sentiment a bit longer. Fed fund futures trading continues to discount the Fed’s ability to sustain a hawkish bent, but policymakers have done so for the past several meetings, with some indications they may continue to do so a bit longer. The Fed finally appears to understand the risks of allowing high inflation to become engrained in the economy, and it appears bent on tackling the problem. We’ve never been able to do so without achieving positive real interest rates – rates that rise above the pace of inflation. We are no where close to doing that yet. However, we also have yet to see the impact on interest rates from shrinking the balance sheet – removing stimulus from the economy. The Fed is really just getting started with that, with M2 money supply still near record levels, and currency in circulation still essentially at record levels. The cash is still in the system. People are adjusting, and they are spending. They don’t like it, but they are doing so. The break in gasoline prices last month brought demand roaring back, which is likely to result in a resurgence of prices at the pump once the government reverses its policy of dumping oil from our Strategic Petroleum Reserve on November 1^st and starts pumping it back into the reserve at a faster pace than its been releasing it.

Severe drought brought water levels to record lows this month in China’s Yangtze River Valley. Crop damage is currently occurring over 1.6 million acres of land, including rice, corn, and various other crops. Hydro-electric power is reduced, resulting in fertilizer and soybean crush facilities being shut down. This is a major crisis in central China, but its overall impact on China’s crop production is still limited at this point. Nonetheless, this morning’s USDA weekly export sales report indicates a pickup of Chinese buying of U.S. corn and soybeans. I see this more as hedging their bets against the possibility of tightening global balance sheets than I do a reflection of immediate need. Yes, China needs to do a lot of purchasing yet for fall delivery, but it’s overall demand remains soft, relative to normal. Tensions between China and the United States continue to escalate as well, with the United States ratcheting those higher again with an announcement that it will engage in trade talks with Taiwan. Near-term, the focus is still on the U.S. corn and soybean crops finishing with a broad drier weather pattern, albeit in the absence of heat. Traders will be closely following reports from the field next week when the Midwest Crop Tour spreads across the Ag Belt, with social media full of reports and pictures from the field.

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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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