Perspective: Morning Commentary for November 1

By: Arlan Suderman, Chief Commodities Economist

Mon, 01 Nov 2021, 12:56

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 1 – It’s Fed week on Wall Street, with all eyes on this week’s meeting of the Federal Reserve. Cautious optimism fueled modest buying of stock futures overnight, supported by strong earnings reports, but this week’s developments from the Federal Reserve could go a long way in determining whether the record rally continues, or whether it faces more significant head winds in the weeks and months ahead. Ironically, the Fed may be faced with tough decisions based on whether Democratic leaders find the votes to push through trillions of dollars of new spending contained in two major spending bills in front of them this week. The VIX is trading near 17 this morning, while the dollar index trades near 94.1. Yields on 10-year Treasuries are trading near 1.59%. Crude oil prices are modestly higher to start the week, while the Ags are mixed to higher as well.

The Federal Reserve has painted itself into a corner, and it is running out of room to operate. Inflation was not transitory, although there were certainly transitory aspects to it. The unintended consequences of unprecedented fiscal and monetary stimulus took their toll on the economy by artificially elevating consumptive demand at a time when the production cycle was hampered by global Covid restrictions. Labor shortages slowed the recovery of the production cycle, even as the continued presence of massive stimulus remained in place elevating demand. The combination compounded supply chain disruptions, that elevated inflation pressures to even greater levels. That began to slow economic growth, but the demand continues at a strong pace.

The Fed now faces the need to taper its stimulus in the same week that House Speaker Nancy Pelosi promises votes on another large fiscal stimulus package that will require more government borrowing. That creates a problem if the Fed is truly going to start tapering its asset purchases. That’s because the Fed has been the buyer of nearly 60% of our nation’s debt certificates since the pandemic started, holding down interest rates. New buyers will need to step forward to fill the vacuum in the debt market if the Fed pulls back its purchases, but why should those buyers do so if the realized yields are negative – set yields are below the inflation rate? As such, yields would need to increase notably to attract the buyers needed to replace the Fed’s purchases. That would then steepen the yield curve, putting greater pressure on the Fed to raise its benchmark short-term rate faster than it preferred. Its option to avoid the above would be to continue its asset purchases to maintain demand for the debt certificates, but that would double-down the stimulus as money enters the economy from both the fiscal and monetary side, further elevating consumer demand and increasing inflation pressures. Wall Street loves the stimulus, because much of the money ends up flowing into the equities and into the commodities, but it worries about the longer-term risk of runaway inflation that could require drastic action to undo – similar to Paul Volker’s push to nearly 20% rates four decades ago. For now, Fed Chair Jerome Powell’s press conference performance on Wednesday afternoon must convince Wall Street that the Fed fully grasps the risks, and that it has everything under control.

China’s Covid problem is escalating. Its numbers are well below those of much of the rest of the world, but the trend surely has its leaders concerned. China reported 59 new local Covid-19 cases today, according to today’s edition of China Direct published by our Shanghai office. This round included one infected person going to Shanghai Disneyland Park. Authorities shut down the entire resort, testing 33K visitors before they were allowed to leave. Those people now must stay home and do three more rounds of testing over the next two weeks. It’s that kind of inconvenience which is increasingly discouraging China’s residents from traveling or from spending time in restaurants or other public places, providing a drag on its economy. Furthermore, the resulting lockdowns are also contributing to the global supply chain disruptions as the production and transportation of goods is slowed. There’s also a concern here, because at least two of today’s cases lack a known source, suggesting that another outbreak may be starting simultaneously, creating additional challenges for authorities.

StoneX is scheduled to release the results of its final customer production survey of the season this afternoon, kicking off a string of private estimates to be released this week ahead of next week’s USDA WASDE report. Fundamentally, the market will be focused on these numbers and how they might impact next week’s balance sheets, within a context of rapidly rising input costs that are expected to impact global planting decisions in 2022. But fund managers will be monitoring this week’s developments at the Fed, as well as in Congress, that will color the filter through which they view the above fundamentals, with crude oil likely setting the tone one way or the other.

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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

Grains & Oilseeds

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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Morning Grain Comments 8-7

Morning Grain Market Comments - Matt Zeller

Matt ZellerFri, 07 Aug 2026, 11:56

Grains & Oilseeds

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