Perspective: Morning Commentary October 28

By: Arlan Suderman, Chief Commodities Economist

Tue, 28 Oct 2025, 13:24

Today's Perspective Video: Are We Near a China Trade Deal?

October 28 – It’s day # 28 of the partial government shutdown. The ironic thing is that Wall Street seems to be adjusting to this reality, with no panic about when things might change, although there are certainly those who are directly impacted by the shutdown. Nonetheless, this week’s focus is on the Federal Reserve, which begins two days of meetings today, along with the ongoing negotiations to finalize a major trade deal with China by Thursday. And let’s remember that several other trade deals were signed with countries in Southeast Asia in recent days as well, including another rare earth minerals deal with Japan. Earnings season has gone well, and now Wall Street expects to get another rate cut from the Fed tomorrow. Stock futures firmed again overnight following yesterday’s record performance, while the VIX trades below 16 and the dollar index trades near 98.9. Yields on 10-year Treasuries are trading near 4.00%, while yields on 2-year Treasuries are trading near 3.51%. Crude oil prices are down by more than 1% on expectations that OPEC+ will again hike output when it meets, while the grain and oilseed markets are again led higher by soybeans on China trade deal optimism.

Wall Street puts a near 100% certainty on the Federal Open Market Committee cutting its benchmark interest rate by another 25 basis points when it concludes its October meeting tomorrow. That cut has already been baked into the market, along with expectations for yet another cut in December. That puts the focus on the Fed’s balance sheet. The Fed balance sheet swelled to roughly $9 trillion in the spring of 2022, reflecting the amount of Fed stimulus in the economy. That is a big part of what created inflation problems in our economy, along with several other factors. The Fed balance sheet was less than $1 trillion ahead of the Great Recession in late 2008, before it ballooned to $2.2 trillion by the end of that year as the central bank tried to stabilize the economy. A period of heavy business regulation followed, preventing that stimulus from creating inflation, giving the central bank confidence that it could stimulate without fear of inflation. It continued to stimulate off and on over the next few years, before trying to remove some of that stimulus in 2018 as the economy gained momentum due to the Trump tax cuts in his first administration. The Fed entered the pandemic with a balance sheet near $4.2 trillion. Not fearing inflation, it more than doubled its balance sheet in the months that followed, taking it to near $9 trillion by early 2022.

The Fed grows its balance sheet by purchasing Treasuries and mortgage-backed securities, which has the impact of injecting liquidity into the economy. In essence, it’s a way of printing money, but the central bank prefers to call it quantitative easing. Doing so created demand for Treasuries that funded massive congressional spending. The impacts of that government borrowing were limited due to near-zero interest rates. At one point the Fed was buying more than half of the debt certificates being offered, helping to keep interest rates contained. It shrinks the balance sheet by not buying new certificates as old ones mature, requiring increased buying from other sources – retail buyers, institutional buyers, foreign buyers, etc. – to keep interest rates from rising too fast. But the supply of debt certificates keeps rising, threatening to exceed the demand for them at times, which would put upward pressure on rates. Roughly half of the money available for investment has been going into debt certificates, limiting the amount available for investing in our economy, which in turn limits growth. As such, expect the Fed to take steps to halt shrinking of the balance sheet close to where it is currently at – near $6.6 trillion. This should act as a bit of a stimulus to the economy, while helping to keep interest rates contained – especially on the longer end of the curve.

Tensions with China ticked a bit higher over the past couple of days following two separate crashes of U.S. military aircraft in the South China Sea for unknown reasons in less than an hour of one another. No known reason for the crashes has yet been made public, China claims the international waters of the South China Sea as its own, while the United States continues to patrol the seas to keep them open for international shipping. Otherwise, the focus is on negotiating the details of the trade framework agreed to over the weekend so that an agreement can be signed by both President Trump and President Xi on Thursday. Soybean prices continue to work higher while waiting for those details, with speculative buying possibly intermingled with Chinese buying. Farmers have actively been selling into the rally in the grain and oilseeds markets, not trusting Chinese buying to match the hype around the deal. They remember how Chinese buying under the Phase One agreement reached just 58% of what China had committed itself to purchase. Estimates in the Chinese cash market vary between 5 and 10 million metric tons for immediate soybean needs to fill the gap ahead of the arrival of cheaper new-crop Brazilian supplies. That would certainly help the U.S. balance sheet, but it wouldn’t be enough to justify rationing demand with higher prices. Larger shipments than that are needed to provide longer term strength to soybean demand. Persistent rains in the North China Plain hurting corn quality and delaying winter wheat seeding may increase demand for those commodities as well, although China has other options to source those grains if it so desires.

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Perspective: Morning Commentary for August 11

August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.

Arlan SudermanTue, 11 Aug 2026, 13:21

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Perspective: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

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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

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