Perspective: Morning Commentary for December 6

By: Arlan Suderman, Chief Commodities Economist

Tue, 06 Dec 2022, 14:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 6 – The mood remains subdued on Wall Street following Monday’s selloff, as traders worry about what the Federal Reserve might do to slow the economy when it meets next week. Those worries trumped positive news out of China of more steps to reopen its economy. The VIX is trading near 21 this morning, while the dollar index pulled back from yesterday’s big gains to trade near 105.1. Yields on 10-year Treasuries are trading near 3.57%, while yields on 2-year Treasuries are trading near 4.39%. Crude oil prices are roughly 1% lower on the above economic worries, while the grain and oilseed markets were mixed to higher.

There’s a big focus on Wall Street on the massive inverse in Treasury yields. Normally, the longer maturing Treasuries hold the higher yield, but the current massive inverse between the 2-year and 10-year Treasury yields currently has Wall Street worried. The pundits see this inverse as a near guarantee that we will have a recession in the coming year, and we may. My personal bias is that we will remain in a stagflation mode – stagnant economy with inflation lingering, although I can’t rule out a recession. But one can also make a valid argument that the inverse is also a product of monetary policy, with traders continuing to believe that the Fed will be lowering rates again next year. The markets have been wrong about the Fed for the past eight months. To a great extent, Treasury yields among the various maturities are typically a reflection of trader expectations for the economy, but today’s obsession with the Fed suggests that it may be more a reflection of trader expectations for changes in monetary policy, and its track record for anticipating moves by the Federal Reserve has not been very good this year.

“Beijing readies itself for life again,” read a headline from the state-run China Daily newspaper today. It went on to say that people in China are “gradually embracing” newfound freedoms as Covid-related restrictions are lifted. Beijing joined the list of cities no longer requiring a negative Covid test to use public transportation or to visit a restaurant or public park. The moves come following a wave of protest in many cities across China as people tired of daily testing and tight restrictions. China is expected to release a list of 10 new easing measures this week – possibly on Wednesday – that would further lift restrictions. The response is mixed from the people of China. Some are celebrating the newfound freedoms, while others worry about the consequences of Covid’s potential rapid spread. The latter rushed to stores to buy Covid antigen kits and fever medicine. Meanwhile, health officials are preparing the people for a broader opening, stating that the current Covid variants are not much different than the common cold, with more than 90% of the cases being asymptomatic or with very mild symptoms. The risk is that even the current mild variants could create a crisis among China’s elderly – which make up a large portion of its population – putting stress on an undeveloped healthcare system. That’s the big unknown that is yet to be determined over the next several months. But China appears no longer able to contain either the virus or the people, with little choice but to open up its economy in the weeks and months ahead. The question now is, will China fully remove Covid restrictions prior to the Chinese New Year celebrations in late January, or will it wait until after the holiday?

Just one ship left Ukraine ports yesterday, loaded with 21.955K metric tonnes of corn. Shipments out of Ukraine continue to slow as Russia slow walks inspections of ships. Each ship must be inspected prior to being granted permission to enter Ukraine’s three approved ports, and then it must be inspected again after it leaves the port before it can continue on to its desired destination. The Joint Coordination Center reports that 67 bulkers are currently waiting for permission to advance to one of the approved Ukraine ports, while another 28 are loaded with grain or other agricultural products and are waiting for inspection prior to heading to their destinations. These delays reduce the amounts of products that Ukraine can export, but they also increase costs for shippers. Ukraine officials are also asking the international community for assistance for farmers and the agricultural industry. Farmers could plant another 30% more crops this coming year if they had more seed, according to officials, while they’re also asking for 1,125 generators to support the production and movement of agricultural commodities.

China bought 27 cargoes of soybeans last week, including 11 U.S. cargoes for December and January shipment, eight Brazil cargoes for shipment January to April and eight Argentine shipments for May. Our cash sources indicate that China still needs to book about 3 million metric tons for January and 2.5 mmt for February. USDA announced sales of just over 0.5 mmt of soybeans to China and to “unknown destinations” this morning, filling a portion of that deficit, with more sales likely in the days ahead. The earliest of the Brail soybeans should be harvested in a few weeks. Those soybeans then need to make their way to the ports for the 45-day trip to China. The greater flow of beans will start in January, stretching into February. The current sales will likely lead USDA to hold its export target steady on Friday, although a large Brazilian crop could still end up cutting U.S. shipments later in the marketing year due to abundant alternative 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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