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Perspective: Morning Commentary for September 4

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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September 4 – What better way to gear up for Labor Day weekend than a blowout Non-Farm Payrolls report, with this morning’s release showing 162k jobs being added in August, nearly tripling the average analyst estimate and marking the highest reading since March. Even more optimistic, the ugly loss of 23k jobs seen in July was revised notably higher to show 21k jobs being added during the month, while June was revised 11k higher to now show an addition of 31k. It’s interesting to note that August’s strength was seen in both the private and public sector, with the private sector adding 127k jobs in August, the highest monthly gain since April, and the public sector adding 35k jobs, the highest since October 2024. The unemployment rate in the U.S. held steady at 4.1% in August, now tied with July for the lowest level since June of last year. Also notable was the improvement in the labor force participation rate, rising to 61.6% in August from the 61.4% seen in July which represented the lowest rate since the height of the pandemic over six years ago. Overall, this was a very impressive result for the health of the U.S. labor market, keeping one side of the Fed’s dual mandate in check.

With the labor market appearing in check, the focus of the Fed shifts more to inflation. We’ll get our first look at whether the progress seen in June and July can continue into August with PPI due out next Thursday (9/10) and CPI following on Friday (9/11). We’ve seen more signs of lingering inflationary pressures in other August releases, but this morning’s BLS report showed average hourly earnings cool to a 3.1% year-over-year increase in August from the 3.2% seen in July. While that points to a cooling of underlying wage inflation, it is worth noting that this means we’re set to see a fifth consecutive month of negative real wage growth barring a major unexpected drop in next week’s CPI data.

Stock futures are pointing to a lower open to start the day, with good news back to being bad news as the renewed sign of robust health in the U.S. labor market could act a permission signal for the Fed to hike rates. The VIX briefly fell below 14 for the first time in 2026 earlier this morning, though it has since bounced back to 14.2 at the time of writing. The dollar was relatively muted overnight but surged higher following the unexpectedly large Non-Farm Payrolls print, again a reflection of higher rates from the Fed. Treasury yields are on the rise this morning as well, with 2-year yields surging back above 4.39%, 10-year yields back above 4.78%, and 30-year yields sitting at 5.25%. Crude oil is looking to erase some of the week’s notable gains this morning, with nearby WTI down 1.6% to trade near $90.20 and nearby Brent down 1.2% to trade near $94.40. The ags are mostly lower to start the day, with further signs of a potential renewal in peace negotiations between Russia and Ukraine that could potentially restart grain movement from the Black Sea.

U.S. Special Envoy Steve Witkoff and Trump adviser Jared Kushner are expected to travel to both Moscow and Kyiv in the next few days in an attempt to rekindle peace talks, with commodity movement through the Black Sea likely in focus. Russian state media outlet TASS reported that these meetings are expected to take place over the weekend, but the Kremlin has not confirmed them, with Press Secretary Dmitry Peskov saying he would not announce anything in advance and adding “when these contacts take place, we will inform you.” Peskov appears to be trying to temper expectations, with his comments today emphasizing that it is still too early to discuss details or the chances that this round of negotiations produces some form of settlement.

Following Putin’s comments yesterday suggesting that there is a chance for peace, this would be another step in the right direction if the meetings do in fact come to fruition, but I would again recommend exercising caution until we see some sign of actual de-escalation on the ground. The back-and-forth strikes continue, with Russia hitting Ukrainian energy production and Black Sea port/shipping infrastructure overnight, while Ukraine retaliated against Russian Black Sea oil infrastructure and an offshore-energy support vessel. Sticking in the Black Sea, Ukraine struck an oil depot in Adler, in the Sochi area, with Russian authorities reporting a fire at the facility but no details regarding overall damage emerging yet. In the same operation, Ukraine also hit Russia’s Sirius air defense site, which houses surface-to-air missiles used to intercept Ukrainian drones in the region. As could be expected, no reports of damage have been publicly announced, but this could prove strategically important if Russia’s ability to stop such strikes in the region are degraded. The question for managed money holding sizable speculative net longs in the grains and oilseeds is how to weigh the escalation on the ground versus the improvement in rhetoric. Just the fact that suggestions of peace talks resuming triggered such a sharp selloff in the wheat complex yesterday is a good reminder of the headline risks these markets face amid that fund net length, but the ongoing attacks act as a good reminder of the risks to commodity movement from the region ahead.

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Perspective: Morning Commentary for September 4

September 4 – What better way to gear up for Labor Day weekend than a blowout Non-Farm Payrolls report, with this morning’s release showing 162k jobs being added in August, nearly tripling the average analyst estimate and marking the highest reading since March. Even more optimistic, the ugly loss of 23k jobs seen in July was revised notably higher to show 21k jobs being added during the month, while June was revised 11k higher to now show an addition of 31k. It’s interesting to note that August’s strength was seen in both the private and public sector, with the private sector adding 127k jobs in August, the highest monthly gain since April, and the public sector adding 35k jobs, the highest since October 2024. The unemployment rate in the U.S. held steady at 4.1% in August, now tied with July for the lowest level since June of last year. Also notable was the improvement in the labor force participation rate, rising to 61.6% in August from the 61.4% seen in July which represented the lowest rate since the height of the pandemic over six years ago. Overall, this was a very impressive result for the health of the U.S. labor market, keeping one side of the Fed’s dual mandate in check.

Mike Castle
Mike Castle
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