Perspective: Mid-Day Commentary for January 31

By: Arlan Suderman, Chief Commodities Economist

Tue, 31 Jan 2023, 18:26

Perspective: Midday Commentary

Guest Commentary by Mike Castle

Market Intelligence - Fertilizer Analyst

January 31 - Stocks have erased the morning's losses to trade higher at mid-day, with some optimism lingering from this morning's data showing labor costs increase by less than expected and the market still patiently awaiting news from the Fed. Elsewhere, today's economic data has been mostly negative, with the Conference Board's January Consumer Confidence Index falling by more than expected to 107.1 versus expectations of a rise to 109, and other negative readings outlined below. The VIX has cooled to trade near 19.2, while the dollar has reversed course on the day to trade down below 102 at the time of writing. Treasuries are under pressure today as well, with 10-year yields falling to trade near 3.52% and 2-year yields falling to trade near 4.22%. Crude oil is up slightly, with the nearby WTI contract hovering near $79/barrel, while the ags are mixed.

Housing prices fell by less than expected in November, with this morning's Federal Housing Finance Agency (FHFA) House Price Index dropping only 0.1% from the month prior to 392.26 points versus expectations of a 0.4% drop. This is now the fourth consecutive month that the index has stagnated in the 392's after slowly falling from the all-time high made in June of 396.38 points. The U.S. housing sector has been among the hardest hit in the last year, with inflation cutting into budgets and rising interest rates keeping many prospective buyers on the sidelines. Despite the loss of demand, relatively low inventories of available homes for sale have allowed prices to hang in better than expected thus far, though they will be interesting to keep an eye on going forward.

The Chicago PMI fell by more than expected, with January's reading coming in at 44.3, down from the 44.9 seen in December and below expectations of a slight improvement to 45. Readings above 50 indicate expansion in business activity in the Chicago region, while readings below 50 indicate contraction. January now marks the fifth consecutive month of contraction for the index, though it is up from the low of 37.2 seen back in November. The employment portion's sub-index fell to 42, its lowest level since October, with multiple respondents pointing to labor shortages as one of their top problems. It's interesting to keep this in mind amid the backdrop of this week's Fed meeting, as they've continued to express their need to increase unemployment and cool wage inflation in order to win their broader inflationary battle. This could provide them more ammo to remain committed to their hawkish approach for longer than the market wants or expects.

More negative economic data came from the Dallas Fed this morning, with their manufacturing and services indexes both showing negative (contractionary) readings for January. The service sector was hit hard, with January's reading coming in at -15 and December being revised further downward from its initial -19.8 to now sit at -20.5, a level not seen since the pandemic recovery in 2020. On the manufacturing side, January's reading came in at -8.4, still well within contractionary territory but showing a marked improvement from the downwardly-revised -20 level seen in December. The manufacturing sector in Texas is important to the U.S. as a whole, as the state is #2 in factory production and #1 as an exporter of manufactured goods. January now marks the ninth consecutive month of contraction in manufacturing business activity in Texas, though there is some silver lining in the fact that the -8.4 actually represents the best reading seen since May. The service side has also had quite an ugly streak, now spending eight consecutive months in contractionary territory.

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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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Mike CastleThu, 06 Aug 2026, 13:24

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August 5 – The Dow Jones is ripping higher for yet another session, up safely over 500 points at the time of this writing to carve out another record high; the S&P and NASDAQ are a bit less enthusiastic but the former is still making its own record high, while the latter is less than 500 points off its own top thanks to a strong ongoing week of trade. The dollar is churning lower this morning in an effort to re-test Monday’s 1 ½-month low, while the ten-year note has flipped higher in the mid-morning hours. The CME FedWatch tool interesting has market odds of a quarter-point rate hike next month coming closer to a 50-50 proposition as crude oil prices decline.

Mike CastleWed, 05 Aug 2026, 15:19

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