Perspective: Morning Commentary December 11

By: Arlan Suderman, Chief Commodities Economist

Thu, 11 Dec 2025, 14:34

December 11 – Stock futures came under pressure early in the overnight session following yesterday’s policy decision from the Federal Open Market Committee, although they’ve been generally firming off those lows in the early morning hours. The VIX is trading below 16 this morning, while the dollar index traded to a new seven-week low below 98.3. Yields on 10-year Treasuries fell lower to trade near 4.11% following yesterday’s Fed decision to increase Treasury purchases, while yields on 2-year Treasuries are trading near 3.51%. Crude oil prices are trading 2% lower below $58 per barrel this morning, while the grain and oilseed sector posted modest gains.

The Fed yielded to pressure to lower its benchmark short-term interest rate by another 25 basis points on Wednesday, but it was anything but an easy decision, with as many as six members resistant to cutting the rate, although the vote reflected three dissenting members – with one of those dissenters wanting a 50-basis-point rate cut. The Fed has two mandates – inflation and jobs. Inflation continues to linger near 3%, and it has been above the Fed’s 2% mandate for nearly five years. The jobs market is soft – not in trouble, but it is continuing to show worrying signs of softness. Firms aren’t laying off lots of people, but they’re also not refilling empty positions, nor are they expanding to add new openings, due to lingering “uncertainty” in the economy. The Fed’s famous dot plot graphic indicated that overall FOMC members expect one more rate cut next year, followed by another one in 2027, while the markets are expecting a couple more cuts next year. Ironically, the Fed announced that it will begin purchasing $40 billion in Treasuries per month starting tomorrow to keep the banking system working, even though we already have a plush Fed balance sheet and record M2 money supply. However, those purchases also increase the demand for Treasuries, which “helps” to keep reduce the upward pressure on the long end of the yield curve.

The bottom line guiding the FOMC is that it sees the “neutral” rate – the rate considered to be neither stimulative nor restrictive – as close to 3%. Its members are concerned about sticky inflation and a soft jobs market – two conflicting factors in monetary policy. In that world, it believes that the best place to be is close to the neutral rate, and we’re still at least 50 basis points above what it considers to be neutral. My argument is that “neutral” is actually north of 4%, leaving us in a stimulative position currently, but unemployment is soft not due to restrictive monetary policy, but rather due to President Trump’s “uncertainty” factor in the economy – his constant changing policies have both consumers and businesses afraid to commit to growth. I don’t know if removing “uncertainty” is in his DNA, but I do believe that he will try to remove it in the months ahead as he worries more about losing Congress in the midterm elections next year. The economy is very juiced currently with record high M2 money supply, with a host of stimulative policies in the “One Big Beautiful Bill” set to kick in on January 1^st. In the end, it looks like the Fed will be slowing the pace at which it cuts rates, but with the current objective to slowly move closer to “neutral.” It only controls its benchmark short-term rate, so the longer end of the yield curve will focus more on the private sector’s view of the economy, inflation risks, and the constantly growing supply of debt certificates created by runaway Congressional spending.

First-time claims for unemployment benefits rose to 236K in the week ending December 6, up from a low 192K the previous week, and above analyst expectations of 219K. The four-week moving average rose modestly to 216.75K, up from 214.75K the previous week. Continuing claims for the week ending November 29 fell by 99K to 1.838 million, with the four-week moving average falling 27K to 1.918 million. First-time claims by former Federal civilian workers totaled 643 in the week ending November 29, down 483 from the previous week. Continuing claims filed by former Federal civilian workers in the week ending November 22 totaled 12,732, down another 5,130 from the previous week. We’re seeing a significant trend of declining continuing claims in November.

China is thought to be working on a new property stimulus plan that would pull housing loan rates below 2%, putting monthly mortgage payments below the cost of rent. Nothing official has been announced yet. A healthy property market is essential to keeping China’s economy from spiraling downward, and little that China has done to this point has been able to stabilize this weak market amid its declining population trends.

USDA’s flash sale announcements today included another 9.7 million bushels of soybeans sold to China, with another 8.3 million going to “unknown destinations,” on top of 7.3 million bushels of corn going to “unknown destinations.” Weekly corn export sales for the week ending November 13 – latest released – totaled 93.7 million bushels. Marketing year to date corn export sales through November 13 exceed the seasonal pace needed to hit USDA’s record high target of 3.2 billion bushels by 277 million bushels.

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