Perspective: Morning Commentary December 19

By: Arlan Suderman, Chief Commodities Economist

Fri, 19 Dec 2025, 14:21

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December 19 – It’s been a quiet night of trade in the equities, with a bit of a holiday feel to the markets. Traders are looking for that annually anticipated Santa Claus rally again this year, hoping that recent rate cuts by the Federal Reserve will help to facilitate that. However, their AI fears continue to plant some scattered doubts. The VIX did manage to slip closer to 16 overnight, reflecting relative calm on Wall Street as many traders begin to take extended time off for the Christmas to New Year holiday period. The dollar index is trading near 98.6 this morning. Yields on 10-year Treasuries are trading near 4.15%, as they bounce again following yesterday’s weakness, while yields on 2-year Treasuries are trading near 3.49%. Crude oil prices are modestly higher this morning as they continue to consolidate above $56 per barrel. The grain and oilseed markets generally drifted weaker in overnight trade.

The Bank of Japan raised its benchmark interest rate to 0.75% today, up 25 basis points from its previous level. What’s significant about that is that 0.75% is a 30-year high! That speaks volumes regarding the decades of a monetary policy mess that the central bank is now trying to correct – policy that left its economy stagnated for much of the past 30 years. The BOJ indicated that it is ready to continue raising rates in future meetings as it provided a slightly more upbeat growth outlook, and as it continues to battle inflationary pressures. The BOJ didn’t indicate a rush to raise rates in its comments, but it certainly did communicate a willingness. For years, Japan’s economy was held back by negative interest rates, which resulted in a flood of investment money traveling to the United States for positive returns, even when our rates were low. Some of that money is returning home now, although Japanese investment in our Treasury market went up another $10.7 billion in October, making it the largest foreign investor at $1.12 trillion. Japan last saw interest rates at 0.75% in 1995, when its economy was reeling from the burst of its asset-inflated bubble. That started a prolonged battle with deflation in Japan, which I would argue was enhanced by Japan’s negative interest rate that were designed to fight falling prices. A massive quantitative easing program was also ineffective at reversing the trend.

Ironically, Japan was the model that former Federal Reserve Chair Ben Bernanke followed when seeking a path to dig its way out of the Great Recession of late 2008. Bernanke was a student of the Great Depression, and he was determined not to see the next Depression happen on his watch. He was impressed by Japan’s model for monetary policy, and implemented much of it for the United States. The primary piece that we didn’t adopt was the negative interest rates. The Fed considered them, but a study done by the St. Louis Fed showed evidence that negative interest rates simply prolong the problem rather than correct the problem. Europe followed the U.S. Fed’s leadership of adopting the Japanese model during the Great Recession, as did many other central banks. Unlike the States, Europe did adopt the negative interest rates. The Japanese model fits well with Modern Monetary Theory that justifies infusing economies with massive amounts of fiscal and monetary spending, believing that inflation can be controlled by higher taxes for it to add to spending. That model eventually falls on its face, as we’ve seen, but many policymakers in Washington still believe deeply in it, as it gives them more power. As you can tell, I am not a proponent of MMT, believing that it has never, and will never, work over the long haul, but rather it creates more problems that increase the pain level when those problems eventually have to be fixed.

China held its third auction of soybeans from its reserve supplies, as it seeks to make room for the soybeans that its state buyers are purchasing from us to fulfill obligations under the handshake trade deal of October 30. China offers roughly 20 million bushels of some of the older soybeans held in its reserve each week. The first week saw crushers take nearly 80% of the soybeans offered. Nearly 63% of the total was taken in the second auction, while just less than a third was taken in today’s auction. Crush margins are poor currently, and crusher inventories of cheap Brazilian old-crop soybeans are high, with even cheaper new-crop supplies arriving starting in 60 days. Feed demand is weak as hog producers pare back herds due to weak margins. Analysts in China are growing in their confidence that China will purchase the 12 million metric tons (441 million bushels) committed to for this year, but actual shipment of the total will likely be spread out over the next eight months, or longer.

Soybean prices continue to leak lower amid skepticism that the Chinese soybean purchases will be sufficient to justify rationing demand with higher prices, when Brazil is on the cusp of another big harvest. This year’s crop looks to be another 350 to 400 million bushels larger than the last one. Meanwhile, corn prices remain in a sideways trading pattern, supported by robust export demand, but capped by ample supplies to fill that demand. Wheat prices are once again trying to find a bottom. Dryness continues to expand in the Plains hard red winter wheat belt, as well as in parts of Europe, but it’s difficult to sustain a rally on those factors ahead of the spring green up.

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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Perspective: Morning Commentary for August 3

August 3 – Equities futures are pointing higher to open the week and month, still in range of recent record highs and flush with optimism that the U.S. and others will start to negotiate with Iran over the Strait of Hormuz. A busy week is on tap with earnings reports and jobs data, among other economic releases. Crude oil is down over $5 per barrel and nearing in on three-week lows. The dollar is only slightly lower this morning but at its own month-and-a half low, while the U.S. ten-year note is also slightly on the low side at 4.68. The VIX index is rebounding a bit today after a sharp slide into the end of last week, just above 16.

Matt ZellerMon, 03 Aug 2026, 12:45

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Perspective: Mid-Day Commentary for July 31

July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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