Perspective: Morning Commentary for December 29

By: Arlan Suderman, Chief Commodities Economist

Thu, 29 Dec 2022, 14:19

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 29 – Stock futures are again cautiously higher to start trade today, as traders balance recession fears with optimism about China reopening in the months ahead, while squaring their positions to close their books for 2022. The VIX continues to consolidate near 22 this morning, indicating lingering low levels of fear on Wall Street. The dollar index is trading near 104.0. Yields on 10-year Treasuries continue to rise, trading near 3.88%, slowly closing the big gap with yields on 2-year yields that are trading near 4.37%. That suggests that more people on Wall Street are starting to take the Fed’s promise to raise rates higher and longer than previously expected at their word. Crude oil prices are down roughly 1% in broad weakness for the commodity sector this morning on recession fears, with grain and oilseed prices modestly weaker this morning as well.

First-time claims for unemployment benefits rose to 225K in the week ending December 24, up from 216K the previous week and above analyst expectations of 222K. Yet, the four-week moving average slipped to 221K claims, down from 221.25K the previous week. Continuing claims for the week ending December 17 rose 41K to 1.710 million. This is a number that remains at historically low levels, but it’s slowly rising. That is unfortunate for the people behind those numbers, but it’s an essential part of tackling wage inflation by bringing the number of job openings into better balance with the number of job seekers.

The United States will require a negative Covid test before people can enter the country from China starting January 5^th. Data released within China indicates that the infection rate in Sichuan province exceeded 63.5%, with 38.6% of the patients showing symptoms for more than five days, and the majority of those over 65 years of age experiencing symptoms for more than 10 days. A growing number of people have recovered from Covid and are making plans to travel for the upcoming Spring Festival, which we typically attach to the Lunar New Year holiday. The people of China made more than 3 billion trips during the holiday in 2019, but only 1 billion during the Covid restrictions a year ago. It’s looking more likely that we will see a significant rebound in China’s economy starting at some point early next year, raising hopes for increased commodity demand in the months ahead.

It’s getting more expensive to do business with Ukraine. Ships carrying cargo usually carry P&I (protection and indemnity) insurance coverage to protect them from significant loss. The insurance companies providing the protection lean on reinsurance companies to back them with policies that renew each January 1^st. The reinsurance companies declared that they no longer would provide protection from war-related risks in the Black Sea region. As such, P&I clubs American, North, UK and West are no longer able to offer war risk coverage for some liabilities in the Black Sea region after Saturday. These clubs cover roughly 90% of the world’s ocean-going ships. It had previously been reported that those shipping companies participating in the grain initiative that allows cargoes to leave three approved Ukraine ports were pooling their coverage to self-protect each other, but it now appears that will not be sufficient. Yes, some shippers will find their own coverage, or perhaps go un-insured if they can charge the customer a large enough risk premium. Either way, freight costs are going up. Grain will flow via those willing to take the risk, as the opportunity will exist to make good money as long as nothing happens. However, we’ll likely see fewer players willing to participate, and those that do will do so at a higher cost. As for grain leaving Russia, a lot of Russian companies have their own fleet, or have other solutions for dealing with the restrictions. As such, Russian grain will likely continue to flow. This works to Russia’s advantage.

2022 was a year of geopolitical realignment. Russia’s invasion of Ukraine made countries pick sides. If they said they were neutral, they had picked a side. The side you picked determined who you did or did not do business with. Global trade was no longer determined by the efficiency of trade routes, but by the side you chose. That raises the costs of freight, with shipping lanes lengthened, while reducing the overall available supply of commodities. Countries were no longer comfortable with just-in-time supplies, which had become the norm in recent years. This created increased demand, and a great deal of uncertainty. That uncertainty created a great environment for Algo traders, who came to dominate trade as traditional speculative traders stepped to the sideline in many commodities, unwilling to trade the highly volatile markets. 2022 was also the year of the Fed, with the central bank raising its benchmark interest rate 425 basis points during the year, raising the cost of holding positions within the market, while increasing fears of a recession in the year ahead.

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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Perspective: Morning Commentary for August 3

August 3 – Equities futures are pointing higher to open the week and month, still in range of recent record highs and flush with optimism that the U.S. and others will start to negotiate with Iran over the Strait of Hormuz. A busy week is on tap with earnings reports and jobs data, among other economic releases. Crude oil is down over $5 per barrel and nearing in on three-week lows. The dollar is only slightly lower this morning but at its own month-and-a half low, while the U.S. ten-year note is also slightly on the low side at 4.68. The VIX index is rebounding a bit today after a sharp slide into the end of last week, just above 16.

Matt ZellerMon, 03 Aug 2026, 12:45

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Perspective: Mid-Day Commentary for July 31

July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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