Perspective: Morning Commentary for May 5

By: Arlan Suderman, Chief Commodities Economist

Thu, 05 May 2022, 13:14

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 4 – Wall Street liked the Fed’s changes to monetary policy announced on Wednesday. Stocks surged following release of the updated policy statement, while some commodities saw a pop as well. The real key will be to see how we close the week on Friday, after traders have had some time to digest everything contained in the Fed statement, but the initial reaction was sharply higher, although stock pulled back overnight. The VIX is trading notably lower this morning near 26, while the dollar index rebounded to trade near 103.3. Yields on 10-year Treasuries are trading near 2.97%. Money flowed into the broader commodity complex Wednesday as traders anticipated that these commodities would continue to have strong enough fundamentals to keep them attractive as a hedge against inflation. Crude oil prices are up 2%, while the Ags are mostly higher this morning as well.

The Federal Reserve raised its benchmark interest rate by 50 basis points Wednesday afternoon, as expected by the trade. Fed Chair Jerome Powell stated in his afternoon press conference that the policy group had no intentions to raise rates by more than 50 basis points in upcoming meetings, which went over quite well on Wall Street. Fed fund futures had been trading near certain odds of a 75-basis point increase at the June meeting. However, those odds changed dramatically in the hours following the statement release, with Fed fund futures now trading 83% odds of just a 25-basis point rate hike at the June meeting. In fact, Fed fund futures are now trading expectations that its benchmark rate will be at 225 – 250 basis points by the December meeting, which is down 75 basis points from expectations prior to the Fed meeting. That’s a much more dovish view than what we had 24 hours ago. The March meeting minutes included conversation about possibly shrinking the balance sheet by $95 billion per month starting in June. The Fed went with that total, but it isn’t getting to that point until September. It will withdraw half that total per month for June, July, and August, before increasing to $95 billion in September. That total would be made up of $60 billion in Treasuries and $35 billion in mortgage-backed securities in September.

The market reacted bullishly to the above announcement, with the S&P 500 stock index posting its best day in two years. Keep in mind that the economy is still juiced – it’s still full of stimulus. The Fed said yesterday that it will withdraw stimulus at a slightly slower pace than feared with the phase in of shrinking the balance sheet. It was also interesting to note that the food-based commodities saw a pop in price as well when the Fed statement was released – especially wheat. This tells me that the market interpreted the statement as indicating that the central bank would not be overly aggressive in tightening its policy, allowing the economy to grow, but perhaps keeping inflation in play as well. Historically, taming inflation has required taking the Fed’s benchmark rate above the rate of inflation, while also raising the unemployment rate away from full employment to ease wage inflation. It’s going to take some time to do this at the pace that the Fed is currently moving with rate hikes and with tightening. I go back to a comment made by U.S. Treasury Secretary Janet Yellen Wednesday morning. Yellen previously served as Chair of the Federal Reserve. She stated that the Fed’s ability to create a soft landing for the economy would take some luck. This comes from someone who helped create an image that the central bank could micromanage the economy during her term in office. That was one of the biggest mistakes made by the Fed over the past 15 years.

First-time claims for unemployment benefits jumped to 200K in the week ending April 30, up from 181K the previous week and above analyst expectations that it would fall to 178K. This pushed the four-week moving average to 188K, up from 179.75K the previous week. Continuing claims of those still unable to find a job fell another 19K to 1.384 million people, which is the lowest for this number since January 17, 1970, when it was 1.371 million. Other data released today showed that non-farm productivity fell at an annualized rate of 7.5% in the first quarter, which was triple the decline anticipated by analysts, and it was a sharp reversal from the 6.3% gains posted the previous quarter. Meanwhile, unit labor costs surged at an annualized rate of 11.6% in the first quarter, up from 1.0% in the previous quarter and well above the 6.8% gains expected by analysts. That’s pretty stiff wage inflation at work.

A dramatic warm up is expected to occur across the Ag Belt next week, with much of the Midwest shifting drier as well. Rapid drying and an acceleration of fieldwork is expected across much of the southeastern two-thirds to three-fourths of the Midwest Corn Belt next week. Showers return the following week, but temperatures are expected to remain near normal. Unfortunately, areas of the Dakotas and Minnesota are expected to continue to see normal to above-normal rainfall, while the pattern remains mostly dry for much of the southwestern winter wheat belt.

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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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