By: Arlan Suderman, Chief Commodities Economist
February 17 – Fears of a hawkish Federal Reserve weighed on Wall Street this morning as we approach a three-day holiday weekend. The U.S. markets will be closed for the President’s Day holiday on Monday. Traders are wary of going into the weekend with too much ownership in the equities following this week’s hot inflation and retail sales data releases. Recession fears are returning once again, with Treasury yields pushing to fresh three-month highs. The VIX is trading near 21 this morning, reflecting a modest rise in anxiety on Wall Street heading into the weekend, while the dollar index is trading at six-week highs near 104.3. Yields on 10-year Treasuries are trading near 3.89%, while yields on 2-year Treasuries are trading near 4.67%. Crude oi prices are 4% lower on those recession fears, but the grain and oilseed markets were mixed to higher as they held their ground despite the strong dollar and mounting recession fears.
This week’s data sent a clear message to Wall Street – the Fed has more work to do to bring inflation down to its 2% mandated level. Inflation in the service sector, which is heavily labor dependent, remains strong and it is trending higher. Commodity inflation is creeping back in as well. I criticized the Fed for being late to the game, but I applaud its tenacity thus far in staying the course. In fact, one can make an argument that it should have raised its benchmark rate another 50 basis points instead of 25 at its last meeting, which is what two members of the FOMC argued that it should do.
Is America’s problem that there is too much stimulus still in the economy, creating strong demand that exceeds the supply of goods, services, and human resources, or are we simply addicted to spending? We were a service-oriented economy prior to the pandemic, but that changed when we were told to stay at home while we figured out the risks with the Covid-19 virus back in the spring of 2020. Sitting at home full of fear of the unknown, we realized that we had government stimulus checks in our accounts. It felt good to buy things, and we rediscovered the addiction of online shopping, shifting us to a goods-oriented economy. The service sector is coming back, but we still love to shop.
Stimulus money remains in the economy to support that spending, but we’re also increasing the use of credit to feed our new-developed habit. Consumer debt across all categories now totals a record $16.9 trillion, up $1.3 trillion on the year. That increase in the use of credit comes as interest rates are rapidly rising, decreasing our ability to pay it off. Elected leaders know that we want our stuff, and so they are committing to giving us more of those wanted things for little to no cost, pushing our national public debt to new records, and threatening our nation’s ability to pay its bills. The annual interest expense on our $31.6 trillion national debt is $533 billion, and it is rapidly rising as rates increase. The Congressional Budget Office warned this week that we are on a path to borrow another $19 trillion over the next 10 years. Finding buyers of the debt certificates needed to fund that spending will require higher interest rates, aside from what the Federal Reserve is doing. Failure to find enough buyers will likely necessitate that the Federal Reserve will need to again increase its quantitative easing – printing money to buy our own debt – which is another way of saying that we will be monetizing our debt. The Fed already owns a quarter of our national debt from doing that very thing. That increases the supply of money, which is inflationary. This is not a political problem. It is a cultural problem. This nation was built on hard work and the conviction that doing the right thing would pay long-term rewards. We’ve become a microwave society that wants what we want now, and we’ll worry about paying for it later. But will we be able to pay this tab?
Black Sea risks continue to escalate, with one Russian diplomat suggesting that his country may be close to war with the United States. It’s day 360 of the war, with every indication that Russia intends to throw everything necessary at the conflict to make sure that it wins, and the West increasingly offering a broader spectrum of assistance to make sure that Russia does not win. This is a commodity-rich area of the world, including wheat, corn, crude oil, natural gas, fertilizer, and many more products necessary to keep the world going. Further escalation of this conflict includes a risk that the movement of these commodities out of this region will be further reduced. The markets built in a large premium to account for that risk a year ago, but most of that premium withered away under the fear of economic recession over the past six to nine months. But the risk is still there – perhaps greater today than it was a year ago. Keep your eyes on this region.
Social media reports indicate that widespread frost was seen in Argentina last night, on top of the drought problems, but a look at the data shows that simply is not the case. Frost was rather isolated where it occurred. Argentina’s corn and soybean crops are still getting smaller, but harvest results in Brazil suggest that it is harvesting a very large soybean crop and a decent summer corn crop. Very good yields in the north are more than making up for losses in drier areas of southern Brazil. Storage is at a premium, pushing more soybeans onto the market as the harvest pace picks up. Soybeans are moving to China, and they’re also moving south to Argentine crushing plants. The above factors were largely overshadowed this week by the broader macro-economic fears of recession, leading to choppy weak trade.
This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.
The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.
References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.
StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.
R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.
StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.
This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.
StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism. SAP is an “Approved International Trading Company” authorized to act as a “Spot Commodity Broker” under the Commodity Trading Act.
StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).
SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.
StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.
StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.
StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.
StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.
The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
© 2026 StoneX Group Inc. All Rights Reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
A strong super El Niño has started, but the crop damage that would lift food prices is still expected to land between September and December. Indian wheat area and Southeast Asian palm oil production sit at the front of the transmission chain, with Brazil the larger unresolved question.
Damage to Black Sea ports has stalled grain exports, but the more serious risk is now forming on the farm. Collapsed farmgate prices and a Russian fuel crisis have put part of the wheat harvest in question.
August 13 – The major stock indices traded quietly mixed overnight ahead of this morning’s weekly job numbers and producer price index data. Like Wednesday, this morning’s data was considered good as well, providing support for stocks while generally allowing Treasury yields to slip a bit lower. The VIX is trading near 14.4, which is just above yesterday’s new low for the year. The dollar index is trading near 99.8. Yields on 10-year Treasuries are trading near 4.64%, while yields on 2-year Treasuries are trading near 4.15%. WTI crude oil is trading near $81 per barrel, while Brent trades near $87 per barrel. Wheat prices again firmed overnight on geopolitical risks in the Black Sea Region, while corn and soybean prices pulled back modestly from yesterday’s big gains.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bilateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and track record are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform to “boots-on-the-ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
