Perspective: Morning Commentary for March 15

By: Arlan Suderman, Chief Commodities Economist

Tue, 15 Mar 2022, 13:33

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 15 – The Wild West continues in the markets, as traders balance the war in Ukraine with today’s start of the Fed meeting, higher inflation numbers and conflicted economic data. Stocks paused overnight as the Fed garners more attention, and traders contemplated optimistic predictions from Ukraine that the war could be over in a matter of weeks – May at the latest – with a Russian defeat. Yet, the VIX firmed to trade near 32. The dollar index traded lower near 98.8 this morning, while yields on 10-year Treasuries traded near 2.08%, after reaching a new 32-month high near 2.17% earlier in the session. Crude oil prices are 6% lower, trading at their lowest level since February 25 as Covid increases shutdowns in China, while the Ags were mixed to lower overnight.

The producer price index rose another 0.8% month-on-month in February, falling short of analyst expectations of 1.0%. However, the January number was revised up to 1.2% gains, up from the 1.0% originally reported. The PPI rose 10.0% year-on-year in February, matching analyst expectations. The January number was revised to 10.0% year-on-year growth as well, up from the 9.7% originally reported. The core PPI that excludes the more volatile food and energy costs rose 0.7% month-on-month, up from 0.6% the previous month, while matching the pace seen the previous month. The core PPI rose 8.4% year-on-year in February, exceeding analyst estimates of 8.3%, which is also the reading recorded in January. This keeps inflation at both the consumer and wholesale levels at 40-year highs as the Fed begins two days of meetings to discuss changes in its monetary policy.

The Empire State manufacturing index fell to minus 11.8 in March, down from 3.1 in February and below analyst expectations that it would rise to 8.0. A number above zero indicates month-on-month growth, while the opposite is true as well. Today’s numbers reflect the first decline in business activity in the state of New York since the start of the pandemic. Both new orders and shipments declined modestly, while unfilled orders rose, leading to longer delivery times – substantially longer. Inventories increased as a result of the slower delivery times. Survey participants reported modest growth in employment and slightly longer workweeks. Prices paid by manufacturers remained elevated, while prices received reached another record high level. Ironically, plans for capital and technology spending remained solid, with firms also slightly more optimistic this month that conditions will improve over the next six months. The headline number on business activity went negative this month, as more firms reported that conditions had declined than improved, but the sector as a whole remained optimistic about the future.

Beijing slashed crude oil import quotas as Covid numbers continue to escalate across the country, resulting in larger shutdowns. China’s daily oil processing rate fell 1.1% through the first two months of this year, versus a year ago, putting it at its lowest level since December 2020. China reported 3,507 new locally transmitted cases of Covid-19 yesterday. The bulk of those – 3,076 cases – were in Jilin province, with 2,601 new cases in Changchun, but the rest of the numbers were scattered throughout a large portion of China. Authorities reported another 1,647 domestically transmitted asymptomatic cases yesterday. China does not classify these as confirmed cases yet, but they will likely turn into confirmed cases in the next few days. These numbers are small relative to much of the rest of the world, but they are rapidly increasing, resulting in massive shutdowns of cities and manufacturing, but also indicating that China’s zero-tolerance policy has thus far been unable to contain the Omicron variant.

The Federal Reserve must sort through conflicting data such as the above to set its course for monetary policy going forward while a war rages in Ukraine. I’m sure there will be some lively debate about the pace of interest rate hikes needed this year to tame inflation, and the role that shrinking the balance sheet should play in helping to raise rates naturally. The balance sheet represents the more than $6 trillion in stimulus that is still in the economy. The hawks in the group will want to be more aggressive to bring inflation under control before we repeat the high rates seen four decades ago, while the doves will be concerned that being too aggressive at a time when energy prices are high, and the Ukraine war rages, could drag us into a recession. The Fed helped create this scenario, which was made worse by the Ukraine war. There are no examples from history to look back on for guidance. This an unprecedented situation. The stakes are high, and Wall Street will be the judge tomorrow on the Fed’s performance, even though Wall Street has little guidance on the best path as well. History will be the final judge. Meanwhile, China’s covid problems make crude oil again a questionable hedge against inflation today, putting more emphasis on wheat prices to do the job. Corn and soybean prices pulled back notably but remain just below multi-year highs.

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Perspective: Morning Commentary for August 11

August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.

Arlan SudermanTue, 11 Aug 2026, 13:21

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Perspective: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

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Perspective: Mid-Day Commentary for August 7

August 7 – Stocks are looking to end a strong week on a strong note, with the major indexes all in the green at the time of writing. The VIX touched a nearly seven-month low earlier in the session and remains muted as it hovers just below the 15-mark as this morning’s ugly labor market data helps ease hawkish Fed jitters. The dollar has rebounded from its nearly two-month low earlier in the session but remains in the red on the day, trading at 99.55 at the time of writing. Treasuries have had a very volatile day, with yields tanking following this morning’s Non-Farm Payrolls release but bouncing back into midday, with 30-year yields now trading at 5.209%, 10-year yields trading at 4.654%, and 2-year yields trading at 4.204%. Crude oil has risen from the morning lows as traders eye the weekend market closure for potential geopolitical developments, with nearby WTI now down only 0.2% on the day to trade around $78.10 and nearby Brent breaking into the green, up 1.25% on the day to trade above $83.50. The ags are largely mixed, with the grains and oilseeds mostly in the green, save for a mixed picture in the soy complex, while live and feeder cattle futures move in opposite directions, with the former adding to yesterday’s sharp losses and the latter attempting a rebound.

Mike CastleFri, 07 Aug 2026, 17:09

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