Perspective: Morning Commentary for October 14

By: Arlan Suderman, Chief Commodities Economist

Fri, 14 Oct 2022, 13:30

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

October 14 – Stock futures were mixed overnight following a big bullish reversal on bearish news on Thursday, as traders braced for another key report in retail sales this morning. That report completed a trifecta of reports creating headlines on Wall Street. Wall Street seems to have weathered the data relatively well, albeit in a wild week of intra-day swings. Yet, the VIX continues to trade at elevated levels above 30, suggesting that fear levels remain relatively high on Wall Street. The VIX is trading near 31 at this hour, while the dollar index is trading near 112.6 following a wild bearish reversal on Thursday. Yields on 10-year Treasuries are trading near 3.88% this morning, after once again encountering a significant increase in money flow when yields popped above 4% this week. Yields on 2-year Treasuries are trading near 4.41%. Crude oil prices are trading nearly 2% lower this morning, while the grain and oilseed sector is mixed to lower.

Retail sales were flat in September, falling short of analyst expectations that they would rise 0.2%. The August number was revised to 0.4% growth, up from the originally reported 0.3%, which would account for a bit of the slower-than-expected August change. However, vehicle sales were reported to be down 0.4%. Removing vehicles had retail sales up 0.1% in August, beating analyst expectations that we would see a 0.1% decline, which was also the previous month’s drop. So, sales minus vehicles did grow, and they did exceed analyst expectations. September retail sales minus vehicles and gasoline rose 0.3% since gasoline prices / sales fell in September as well. That falls short of the 0.4% rise expected by analysts, but the August retail sales gains were doubled to 0.6%.

Import prices fell 1.2% month-on-month in September, which was a bit more than the 1.0% decline expected by analysts and more than the 1.1% decline seen in August. In other words, we’re not importing inflation anymore. Import prices were still 6.0% higher year-on-year in September, which is a bit better than the 6.1% expected by analysts, and certainly better than the 7.8% year-on-year rate the previous month and the double-digit numbers we’ve been seeing. However, that may all change if we see a longshoreman strike on the West Coast. Export prices were down 0.8% in September, whereas analysts expected a 0.2% decline. Export prices fell by 1.6% the previous month. This would suggest that we are exporting less inflation than in the past, but the other component to this is the dollar, which is up by nearly 20% over the past year versus a basket of currencies. There are many currencies that are down at an even sharper rate during that time, which means that we are exporting inflation at a significant pace to them. I spoke at the international Export Exchange this week, which had 500 guests from 50 countries registered. This was a concern expressed to me, that our strong dollar is exporting inflation to their countries, while increasing global credit risks. This is a risk that I’ve been warning about for several months when I speak to groups, and something that warrants monitoring.

Tensions with China are on the rise as it prepares for its 20^th meeting of Congress on Sunday, according to today’s edition of China Direct, as produced by our Shanghai office. The newsletter helps communicate how it is viewed from China’s side. “The White House published its long-delayed national security strategy, which analysts believed shaped the US intimidating and aggressive approach towards China, as Washington labeled China as the most consequential geopolitical challenge to America and the world order. The release of the 48-page policy document, just days ahead of China’s key Party congress, sent a clear message to Beijing, that no matter what comes out of the Party congress, it would be its long-term strategy to contain China’s rise, competitiveness, and influence. The Chinese foreign ministry reacted by saying that ‘We oppose an outdated Cold War mentality and zero-sum game’. Washington introduced the ‘harshest’ US ban on chip technology to China last week, and similar confrontational approaches are largely predictable in the future. A new cold war with the intensified competition or even confrontations between the US and China seems to be hard to prevent. Its impact on commodities and agriculture is not immediate, however in the long run, this would accelerate China to reduce reliance on exports and supply from the US, and Agriculture is one of the most important sectors. Recently Chinese authority deepened the efforts to urge the feed industry to speed up the reduction of soybean meal in animal diets. Meanwhile, China also speeds up diversified sources of Agriculture supplies.”

The drought continues to intensify in Argentina, but yesterday’s updated European weeklies model that peers through the month of November calls for the drought to spread north into perhaps the southern half of Brazil in the weeks ahead. I should say upfront that not all the models agree. But it does suggest that the risks are increasing for Brazil, whereas I previously had been highlighting the good start for crops there. Argentina’s wheat crop continues to deteriorate, with some local estimates saying it could fall below 15 million metric tons. Corn planting is notably delayed due to dry soils, but the planting season in Argentina stretches to February, so there’s still time. Brazil’s soybean and summer corn though become a bit more of a concern, even though conditions are generally favorable now. Meanwhile in other news, Russia made more threats today regarding blocking extension of the Ukraine trade agreement.

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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.

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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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