February 27 – Stock futures firmed overnight following a favorable earnings report from Nvidia late on Wednesday, but they’ve turned lower this morning following the release of more economic data. Some comfort was also taken in reports that President Trump will hold off on all tariff decisions until April 2nd, following a report from his task force on trade is provided to him. The VIX is trading near 18 this morning, while the dollar index is trading near 106.9. Yields on 10-year Treasuries are trading near 4.30%, while yields on 2-year Treasuries are trading near 4.11%. Crude oil prices nearly 2% higher at this hour, while the grain and oilseed markets mixed to weaker.
Durable goods orders rose by 3.1% month-on-month in January, exceeding expectations of 1.9% growth. Furthermore, the December data was revised to 1.8% contraction, which was an improvement from the 2.2% contraction originally reported. Durable goods orders minus transportation was flat in January, which fell short of expectations of 0.4% growth. The December data was revised to 0.1% growth, down from the 0.3% growth originally reported. But one of the key numbers was core capital goods orders, which is a reflection of business sentiment. Core capital goods orders rose by 0.8% on the month in January, exceeding analyst expectations of 0.5%, and up from a downwardly revised 0.2% in December. We’ve seen some indications that business sentiment has moderated in February, but this data would suggest that it exceeded expectations in January.
First-time claims for unemployment benefits jumped to 242K in the week ending February 22, up from 220K the previous week, and exceeding analyst expectations of 224K. The four-week moving average rose to 224K, up from 215.5K the previous week. Continuing claims for the week ending February 15 dropped by 5K to 1.862 million. The four-week moving average for continuing claims rose by 3K to 1.865 million. The Department of Labor reports that initial claims for benefits from former Federal civilian employees totaled 614 in the week ending February 15, up 1 from the previous week’s total. There were 353 initial claims filed by newly discharged veterans, which was a drop of 46 from the previous week. A total of 7,612 continuing claims were filed by former Federal civilian employees in the week ending February 8, which was an increase of 502 from the previous week. Newly discharged veterans claiming benefits totaled 4,309, which was a decline of 96 from the prior week. The largest increases in initial claims for unemployment benefits in the week ending February 15 were from Kentucky, Tennessee, and Washington.
The gross domestic product of the United States grew at an annualized rate of 2.3% in the fourth quarter of 2024, according to this morning’s second read of the data, matching the first reading and matching analyst expectations. Personal consumption expenditures during the fourth quarter grew at an annual rate of 4.2%, again matching what had been previously reported, and matching analyst expectations. No notable changes or surprises here.
Tensions eased a bit on Wall Street late Wednesday when the White House provided some clarity on tariffs. President Trump established a task force to assess our trading relationships when he was first inaugurated last month. Their job was to evaluate our trading relationships and to make recommendations to him on April 1st. In the meantime, Trump assessed 25% tariffs on Canada and Mexico and 10% on China until they did their part to help seal U.S. borders from illegal migration and drugs crossing our border. He put a 30-day pause on Canada and Mexico soon thereafter when both countries took significant steps to help seal their borders with the United States. Yet, Trump continued to talk about the “unfair” trading relationships between these two countries and the United States, even though we have a free-trade agreement that was signed during his first term in office. As such, he made an off-handed comment earlier this week that the tariffs would go into effect when the pause ended due to these unfair trading relationships. That provided a great deal of uncertainty for the markets, and for the leaders of these countries, who thought that they had met their obligations. However, the White House has now confirmed that all tariff announcements will be delayed until after April 1st, easing those nerves somewhat.
USDA’s annual Agricultural Outlook Forum began two days of meetings today. I’ve already stated my views of the meetings, which dole out modeling data from agency economists without input from the industry. That said, the market will trade the data, so here are the key numbers. First, USDA put the 2025 initial yields at 181.0 bushels per acre for corn, and 52.5 bushels per acre for soybeans. Look for those numbers to be used in USDA’s May, June and July balance sheets. It put the wheat yield at 50.1 bushels, but it will do actual field surveys of the winter wheat crop in early May to derive its balance sheet yield for that report. Planted acreage was put at 94.0 million for corn, 84.0 million for soybeans, and 47.0 million for wheat. These numbers will all change when the agency surveys farmers next week, with the results to be released on March 31. It’s demand estimates will all change as well.
