Perspective: Morning Commentary for December 2

By: Arlan Suderman, Chief Commodities Economist

Thu, 02 Dec 2021, 14:44

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 2 – Stocks show early strength this morning, as the markets try to rebound from another session of sharp losses, although fear remains elevated on Wall Street due to the unknowns of the Omicron virus. The market seems focused more on the unknowns of Omicron than on the knowns. The VIX is trading near 29 this morning, after rallying to a new 10-month high near 33 on Wednesday. The dollar index is trading near 95.9 this morning, while yields on 10-year Treasuries are trading near 1.42%, after falling to a fresh two-month low near 1.40% on Wednesday. Crude oil prices are down roughly another 2% this morning, after trading nearly 27% below their late October highs. The Ags traded mostly higher overnight as the VIX eases back from yesterday’s highs, showing some easing of fears on Wall Street, even though they remain elevated.

The United States, India, France, and Finland are among the latest of more than two dozen countries to confirm cases of the Omicron variant of Covid-19. The variant was first identified in South Africa, although we do not know that its origin was actually there. South Africa notes that those with natural immunity due to a previous Covid-19 infection are showing vulnerability to Omicron, whereas their immunity tended to hold up well for the Delta variant. However, they also note that natural immunity tends to result in milder symptoms with Omicron. The European Centre for Disease prevention and Control (ECDC) predicted that Omicron may be responsible for more than half of all Covid-19 infections in Europe within a few months. Germany is considering restricting unvaccinated people from access to all but the most essential of businesses, such as pharmacies and grocery stores. The Biden Administration is expected to announce its plan to address Omicron concerns later today. That plan will likely include extending mask requirements for travelers through mid-March, according to news reports. The good news is that BioNTech’s CEO believes that its vaccine made with the Pfizer product was likely to offer strong protection against severe occurrences of Omicron. GlaxoSmithKline said that its analysis shows that its antibody-based therapy it is currently developing has shown some effectiveness against Omicron, whereas Regeneron’s antibody drug may be less effective against it, according to Reuters. Most reports continue to suggest that symptoms from Omicron remain mild or asymptomatic.

Perception is reality in the markets, which feed on emotions from day to day. Fear and greed are the primary driving emotions that create big moves, amplified by computers that trade momentum – whichever way it may be leading. The VIX is Wall Street’s fear index. It normally trades in the teens. I’ve observed over the decades that it’s difficult for a commodity to sustain a rally when the VIX is over 30 due to the high levels of fear present in the markets. Money tends to move to the safe-haven assets, as well as to the sidelines when fear is high. An individual commodity can sustain a rally when the VIX is above 30, but it generally needs strong near-term fundamentals to do so. Fear is elevated currently due to the unknowns of the Omicron variant of Covid-19, with traders focused primarily on expectations for its rapid spread around the world that is triggering lockdowns and restrictions from authorities.

That hurts the economy, as well as demand for energy and other commodities. That’s one reason we’ve seen a collapse in energy prices. The food-based commodities have also seen liquidation of speculative long positions on days when fear is elevated on Wall Street, but then both speculative and end user buyers tend to return as fear eases. The food-based commodities are perceived to have more resilient demand that will generally be sustained through lockdowns, although there are variations depending on the culture. Wheat is one of those food-based commodities, as well as corn, which is used to produced meat. Soymeal is another, while soyoil is increasingly seen as an energy commodity, tracking with crude oil prices. But the Ag complex as a whole tends to also be seen as a place that fund managers can include in their portfolios as a hedge against inflation, which remains strong.

First-time claims for unemployment benefits rose to 222K in the week ending November 27, up from last week’s post-pandemic low 194K, but still well below analyst expectations of 245K claims. The previous week’s total was a revision lower from the 199K originally reported last week. The net result was a decline in the four-week moving average to 238.75K claims, down from 252.25K the previous week. Continuing claims fell to 1.956 million, which is another post-pandemic low and a decrease of 107K from the previous week. This is the lowest level for continuing claims since they stood at 1.770 million in the week ending March 14, 2020. These are good numbers, setting the stage for tomorrow’s big monthly jobs report from the Department of Labor.

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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.

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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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Morning Grain Comments 8-6

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