Perspective: Morning Commentary January 28

By: Arlan Suderman, Chief Commodities Economist

Wed, 28 Jan 2026, 13:32

January 28 – It’s Fed Day on Wall Street. Stock futures were mixed to higher overnight, hovering near record highs in many cases. The VIX is trading near 16 this morning, while the dollar index bounced a bit following Tuesday’s collapse to trade near 96.2. Yields on10-year Treasuries are trading near 4.24%, while yields on 2-year Treasuries are trading near 3.57%. Money continues to flow into the broader commodity sector amid the weaker dollar this morning, pushing crude oil prices to fresh four-month highs, while the grain and oilseed markets were mostly higher as well.

It would be a shock to see the Federal Open Market Committee change its benchmark interest rate when it releases its revised monetary policy statement early this afternoon. A split decision to cut in December has the market anticipating no change as a product of this week’s meeting. In fact, we may not have another rate cut for the duration of Federal Reserve Chair Jerome Powell’s tenure in that position. President Trump is expected to soon nominate a new Fed Chair who will take over the helm of the central bank in May. The primary question then is whether Powell will step down totally from the Fed, or whether he’ll continue to serve on the board? Regardless, the relationship between Powell and Trump has become quite contentious. Trump wants the Fed to cut its benchmark rate further, which may lead the FOMC to simply hold the line until the “data” provides a definitive signal to do so.

However, investors will be invested in every word coming out of Powell’s mouth in the press conference that follows the statement release, in addition to searching the published statement for any change in wording that might indicate a shift in sentiment on the FOMC. There are certainly those on the FOMC that we expect to continue to support additional rate cuts, when the “data” supports such, and some believe that it currently does. But I expect to see others who will want to hold the line – some worried about lingering inflation risks, and some just wanting to resist the president, although they’ll not say that. Look for reporters in the press conference to probe Powell’s intentions regarding staying on the FOMC after he is no longer chair, asking the question in many different ways trying to get him to reveal his intentions. But I expect him to dance around the questions without an answer with perfection. I’m not sure if he knows for sure what he’ll do in May. A lot can happen in four months in a Trump world. In the meantime, M2 money supply is at record highs, the Atlanta Fed GDPNow model puts growth north of 5%, and inflation lingers above the mandated 2% level, but the job market remains soft due to hiring uncertainty and consumers continue to poll poorly, even though consumer buying remains relatively solid.

President Trump appeared in Clive, Iowa on Tuesday, but his appearance in the farm state lacked any major market-moving announcements. It had been hoped that Trump would announce the final 45Z funding guidelines for biofuels in his speech, but the more impactful guidelines that need to be released are the final RVO guidelines for blending requirements, along with the final rules for possibly reallocating small refinery exemptions among larger refiners. Neither occurred on Tuesday. The White House Office of Management and Budget website states that it has completed its review of the final 45Z guidelines, but the Environmental Protection Agency hasn’t submitted the final RVO guidelines to the OMB yet. It may be that the EPA wants to announce all of them together at some point later next month or possibly in early March, since they work together to create the final policy. There’s a quiet optimism in the industry that the final guidelines will be net positive for demand for feedstock to produce biomass diesel, but nobody knows for sure, so the industry continues to hold back production for now. President Trump stated that Republicans in Congress have ethanol on a path toward approval of E-15, although Congress hasn’t had a good track record for accomplishing tasks now for many years.

The dollar index fell to its lowest level in nearly four years Tuesday as the Japanese yen jumped on expectations that Japan’s central bank might intervene to support the yen ahead of snap elections scheduled for February 8. This could also contribute to an unwinding of the yen carry trade. Japan’s central bank has made no secret that it is ready to push interest rates higher if necessary, and the president of Japan is believed to want a strong yen ahead of those February elections as well. That could lead to Japanese investors bringing their money home from the United States now that negative interest rates are a thing of the past. Regardless, the weaker dollar helps U.S. commodities to be a bit more competitive on the world market, providing modest price support for them. In fact, the dollar is still relatively strong on a trade-weighted basis, despite being at a four-month low. President Trump stated Tuesday that he feels good about the dollar, and that he wants to allow it to find its own level of value, speaking of how other countries have often devalued their currencies to facilitate stronger export demand for what they produce. That sent a message to currency traders that the president has no intention to intervene to strengthen the dollar.

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