By: Arlan Suderman, Chief Commodities Economist
January 18 – Stock futures are cautiously higher this morning following a couple of key economic reports that raise hopes of a policy pivot by the Federal Reserve, with retail sales coming in worse than expected and inflation better than expected. The VIX is trading below 19 in early trade this morning, while the dollar index is trading near 101.6, or just above its seven-month lows. Yields on 10-year Treasuries fell notably following this morning’s data release, and they are now trading at four-month lows near 3.38%, while yields on 2-year Treasuries are trading near 4.08%. Crude oil prices are more than 2% higher on further evidence of a rebound in China’s economy, while the grain and oilseed markets were mixed in early trade.
The producer price index fell 0.5% month-on-month in December, down from 0.3% gains the previous month and lower than the 0.1% decline expected by analysts. The PPI was up 6.2% year-on-year in December, down from 7.4% in November and below analyst expectations of 6.8%. Core PPI that excludes the more volatile food and energy sectors rose 0.1% month-on-month in December, matching analyst expectations, although down from 0.4% gains the previous month. Core PPI was up 5.5% year-on-year in December, down from 6.2% year-on-year and below analyst expectations of 5.6%. Once again, declining energy prices are one of the primary reasons for the improving inflation numbers, similar to what we’ve seen with the consumer price data.
Retail sales fell 1.1% month-on-month in December, which was worse than the 0.8% decline expected by analysts. Furthermore, the November data was revised to show a 1.0% decline in retail sales, which was worse than the 0.6% decline originally reported. Retail sales minus vehicles also fell 1.1% month-on-month in December, more than doubling the 0.5% decline expected by analysts. The November data here too was revised to a 0.6% decline, down from the 0.2% decline first reported. Retail sales minus vehicles and gas fell 0.7% month-on-month, which was worse than the 0.1% decline expected. Retail sales minus vehicles and gas for November was revised to a 0.5% decline, versus the 0.2% decline previously reported.
The bottom line in the eyes of traders is, how will members of the Federal Reserve interpret this data? The inflation data raises hopes of peak inflation being behind us, although it still reflects some areas of the economy where inflation is deeply engrained, with risks of rising again if energy prices rebound. The retail sales data reflect the low levels of consumer sentiment late in 2022. A decline in consumer spending results in lower retail sales, which results in a reduced need to producer products and services. That in turn should reduce employment to bring wage inflation under control, which is a necessary component of taming overall inflation. We’ve seen very little evidence yet of slowing wage inflation other than one data point in the monthly jobs report, although the retail sales data suggests that we may be seeing early signs of the slowdown needed to positively impact wage inflation. It should be noted that consumer sentiment has started to rise again. As such, I expect that Fed members will acknowledge the above, while still warning of the need to stay the course until wage inflation has been brought down.
Is this the beginning of the end for the painful monetary tightening policy cycle? Perhaps, but I believe the process of pivoting will take longer than the market expects. StoneX’s Josh Cannington highlighted a statement from Gentrust of interest last week. Looking back at CPI data since 1914, there were 8 times the CPI started below 2.50%, rose about 5% and then went back below 2.5%. The average number of months that cycle lasted was 48 months. The two most recent episodes (1972 – 1983 and 1987 – 1993) lasted 131 and 82 months respectively. Today we are in month 20. Josh went on to say, “In simpler words. . . inflation has a long way to go and will likely have a bumpy ride down. If so, the Fed will hold true to the message of holding rates higher for longer and the market will need to reset those rate cut expectations over time – leading to upward pressure on 2 – 3Y rates in the first half of 2023.” I would add one of the keys will be whether we see a return of commodity inflation in 2023 or not.
Corn and soybean prices rebounded on Tuesday, challenging their late December highs late in the session. That buying interest dried up early this morning. Today’s action should give us a feel for the conviction of the bulls. USDA’s crop report on Thursday re-emphasized the general tightness of grain and oilseed supplies, but the bulls need a real threat to those tight supplies. They pointed to the Argentine drought as that threat, but Brazil’s crops look quite good currently, and rain chances are improving for Argentina. A weaker dollar should provide support.
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.
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.
August 12 – Today’s focus is on inflation, with the July consumer price index data out this morning. We have this, and one more month of data, ahead of the next Federal Reserve meeting. Of course, headlines from the Middle East and the Black Sea wars also have an ongoing influence on the markets. Stock futures posted gains this morning, while the VIX traded just below 15. The dollar index traded near 99.7. Yields on 10-year Treasuries are trading near 4.66%, while yields on 2-year Treasuries are trading near 4.18%. WTI crude oil is trading near $83, while Brent trades near $88 per barrel. The grain and oilseed markets rebounded from yesterday’s losses ahead of today’s highly anticipated WASDE crop report that is due out at Noon Eastern Time.
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.
