Perspective: Morning Commentary for April 27

By: Arlan Suderman, Chief Commodities Economist

Thu, 27 Apr 2023, 13:35

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 27 – Stock futures cut overnight gains following the release of this morning’s GDP & weekly jobless claim data, while the dollar and Treasury yields rallied. The VIX firmed to trade above 18 following the data release, but that suggests that the market is handling things in stride this morning with no sense of panic. The dollar index firmed to trade near 101.7 in early trade. Yields on 10-year Treasuries are trading near 3.50%, while yields on 2-year Treasuries are trading near 4.04%. Crude oil prices are modestly higher in early trade, firming a bit more when the data was released, while the grain and oilseed markets continue to slide on weak demand.

Gross domestic product grew at an annualized rate of 1.1% in the first quarter of this year, down from 2.6% in the fourth quarter and below analyst expectations of 2.0% growth. Today’s number was below the lowest of the analyst estimates in Econoday’s survey ahead of the report’s release. However, personal consumption expenditures rose at an annualized rate of 3.7% in the first quarter, up from 1.0% in the fourth quarter of last year. We’ll get more detailed data on personal income and personal consumption expenditures tomorrow morning, but this appears to suggest that while spending increased, it failed to spur economic growth. Consumer spending accounts for nearly 70% of U.S. economic activity.

The lower-than-expected headline number was largely a product of declining business stockpiling and housing, reflecting the weaker outlook among business managers that I mentioned yesterday in my discussion about core durable goods orders. Business investment rose at a slow 0.7% in the first quarter, down from 4.0% growth the previous quarter. Spending on buildings, oil rigs and other structures surged 11.2%, but spending for computers, delivery trucks, factory machines and other equipment was down 7.3%, reflecting more caution among small businesses, who represent a core component of the economy. This is ironic since consumer spending at the household level accounted for most of the economy’s strength in the first quarter. Consumers complain about the challenges of the economy, but they’re still spending, as they utilize extra savings that they put away during the pandemic. In other words, there is still stimulus in the system. The Federal Reserve knows this, and that is why it has a bias against pivoting too soon, fearing that inflation would come roaring back, as it did back in 1980. Today’s data reflects first quarter activity, but retail sales slowed dramatically in March, suggesting that the pendulum may be starting to swing the other way.

First-time claims for unemployment benefits fell to 230K in the week ending April 22, down from 246K the previous week and below analyst expectations of 249K, leaving the headline number at a relatively low level from a historical perspective. The four-week moving average fell to 236K claims, down from 240K the previous week. Continuing claims for the week ending April 15 fell 3K to 1.858 million. The bottom line today is that the GDP numbers reflect a sour attitude toward the economy from our nation’s businesses. Consumer spending remained strong in the first quarter, although it tailed off some at the end of the quarter. The jobs sector is softening some, but it remains tight overall. The Federal Reserve is still expected to raise its benchmark interest rate by 25 basis points next week, before starting to cut rates by up to 50 basis points by the end of the year. This morning’s data changed little in those expectations.

Russia again blocked movement of four ships in the “safe corridor” yesterday, but they appear to be moving again today. Export demand for grain and oilseeds remains very soft, while chart signals are weak, resulting in continued fund selling. USDA announced this morning that China cancelled another 9.2 million bushels of previous purchases of U.S. corn, bringing the known total of Chinese cancellations over the past couple of weeks to more than 24 million bushels. Good rains of 1” to 2”, locally above 3” fell across a vast area of the southwestern Plains where it is too late to save much of the wheat. There are areas further north and east in Kansas that could still benefit from moisture that still haven’t seen a half-inch rain in more than nine months. Further to the north and east, things are looking up for the Midwest after one more round of cold and moisture sweeps across the belt. The Midwest should see things start to warm up and dry out by the second week of May, when we currently expect to see rapid planting progress. The primary area of concern will remain the northern Red River Valley, but flood waters are receding, and we remain cautiously optimistic that the region will dry out to allow for late planting, although this will be an area to watch. Nonetheless, the overall path of least resistance for the sector continues to be lower.

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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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Perspective: Mid-Day Commentary for August 5

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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