Perspective: Morning Commentary for August 20

By: Arlan Suderman, Chief Commodities Economist

Wed, 20 Aug 2025, 13:29

August 20 – Stocks again had a weaker tone overnight, with the tech sector leading the weakness. Retail earnings reports have sent a mixed message about the economy, while the tech sector faces its own set of challenges regarding exports to China. The Federal Reserve is expected to release the minutes of its July policy meeting this afternoon, which could provide insight into whether there were more than the two dissenting voters who argued for rate cuts, or not. The VIX is trading near 16 this morning – still relatively low but slowly edging higher ahead of Friday’s highly anticipated speech by Federal Reserve Chair Jerome Powell from Jackson Hole, Wyoming. The dollar index is trading near 98.1 this morning. Yields on 10-year Treasuries are trading near 4.30%, while yields on 2-year Treasuries are trading near 3.75%. Crude oil prices are bouncing roughly 1% this morning, following their recent weakness, while the grain and oilseed complex was quietly mixed overnight.

Wall Street is fixated on the rate cut issue. It wants to see rate cuts from the Federal Reserve, and the more the merrier. It believes that Powell has enough justification in softening employment data to justify a rate cut at next month’s meeting, with one or two more rate cuts before the end of the year. But slowly rising inflation data keeps nagging doubts in place in whether Powell will make the move that President Trump has been pressuring him to do. He knows that he will not be able to stay in his seat as Chair of the Fed beyond May – Trump has made that clear. He doesn’t want to be seen as a political pawn that yields to political pressure. At the same time, he’s human, and he would like to ease the pressure before he loses the support of the other policymakers. Two of those policymakers voted against him in the July meeting – the first double-dissent at a Fed meeting since 1993 – one of which is a leading candidate to replace Powell. Wall Street traders hope that today’s Fed minutes will reveal that there are others about to flip their positions toward rate cuts as well. Policymakers in China will be watching this drama unfold as well. U.S. rate cuts would allow them to also move forward with stimulative rate cuts.

U.S. Treasury Secretary Scott Bessent told the media Tuesday that the White House is satisfied with the status quo with China. He also stated that the next round of trade talks with China will likely occur prior to November, but no dates have been set yet. The latest agreement to suspend high reciprocal and retaliatory tariffs between the two countries extends until November 10. That means that some type of an agreement is likely by then, but big agreements rarely happen much before a deadline as each use the deadline as leverage to get as much as they can out of the deal. While not publicly confirmed, industry sources indicate that the May 11 agreement to suspend tariffs included an agreement to allow rare earth minerals and magnets to flow from China to the U.S. auto industry for a six-month period in exchange for U.S. computer chips to flow to China. If true, that would suggest that rare earth minerals will be a priority for any agreement reached in November. Commodities could certainly be a part of such an agreement as well, but we don’t know that to be the case until they are. Meanwhile, China continues to largely source its commodity needs from elsewhere, other than pork purchases. The biggest impact has been on the U.S. soybean market, which sent nearly one out of five bushels of soybeans produced in 2024 to China. Thus far we have notice of zero bushels of the 2025 crop committed to China. Its window of opportunity for selling soybeans to China essentially closes in December, with buyers looking to cheaper new-crop Brazilian supplies beyond that point.

Unemployment among non-student young people aged 16 – 24 in China rose to 17.8% in July, up from 14.5% in in June. The unemployment rate among those aged 25 – 29 rose to 6.9% in July, up from 6.7% in June. This is a rising problem for China as it stands tall and strong against the Trump tariff war. Rising unemployment among its younger generation continues to contribute to a lower marriage rate. Marriage registrations fell 20% on the year in 2024. That then leads to a lower birth rate, since births outside of marriage are not allowed in China. This comes during China’s anti-involution campaign in which it is trying to reduce over production capacity in its manufacturing sector, which also tends to reduce workers. China’s state-run economy needs to create employment for these young workers to sustain its economy, so it is doing so thus far with massive infrastructure projects that increase government debt.

The Pro Farmer Midwest Crop Tour reported that the Nebraska tour routes saw an average corn yield of 179.5 bushels per acre, up from 173.2 the previous year, and above the three-year average of 166.3 bpa. Soybean pod counts totaled 1,348, up from 1,172 the previous year, and above the three-year average of 1,132 pods. Indiana’s average corn yield came in at 193.8 bpa, up from 187.5 bpa last year and above the three-year average of 182.1 bpa. Soybean pod counts averaged 1,377, down from 1,409 last year, but up from the three-year average of 1,295. Today’s tour will focus on Iowa, moving into southern Minnesota to wrap things up tomorrow. They should see their best crops of the tour today and tomorrow. The tour traditionally understates USDA final yields.

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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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