Perspective: Morning Commentary for August 10

By: Arlan Suderman, Chief Commodities Economist

Wed, 10 Aug 2022, 13:28

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 10 – Inflation is expected to top the discussion list on Wall Street today, following the release of the July consumer price index, with the July producer price index scheduled for release tomorrow. The VIX fell to a fresh three-month low below 21 on the data release this morning as stocks rallied, with the dollar index falling sharply to a five-week low below 105.0. Yields on 10-year Treasuries fell to 2.67%, before rallying to 2.75%, with the yields on 2-year Treasuries at 3.13%. Crude oil prices are mixed, while the grain and oilseed markets pressed higher on weather concerns and rising export demand related to those weather concerns.

The headline CPI number was flat month-on-month in July, which is a dramatic change from the 1.3% gains seen in June. Analysts expected 0.2% gains. The CPI rose 8.5% year-on-year in July, down from 9.1% in June and below analyst expectations of 8.7%. The core CPI that excludes the more volatile food and energy sectors rose 0.3% month-on-month in July, down from 0.7% in June and down from analyst expectations of 0.5%. The core CPI rose 5.9% year-on-year in July, matching the June pace, but down from analyst expectations of 6.1%.

Food inflation was up 1.1% month-on-month in July, while up 10.9% year-on-year. This was the 7^th consecutive month that saw food prices rise 0.9% or more on a monthly basis. Food for consumption at home was up 1.3% month-on-month and up 13.1% year-on-year. Food for consumption away from home was up 0.7% month-on-month and up 7.6% year-on-year. Energy prices were down 4.6% month-on-month in July, while gasoline was down 7.7%, fuel oil down 11.0%, natural gas down 3.6%, while electricity was up 1.6% month-on-month. We all remember how many food and energy commodities tumbled in July, although that didn’t translate into cheaper food prices at the retail level. Overall, energy prices are still up 32.9% year-on-year, with gasoline up 44.0%, fuel oil up 75.6%, natural gas up 30.5% and electricity up 15.2% year-on-year. Commodity prices ebb and flow, but many of the structural problems creating inflationary pressures, in addition to the wage inflation discussed yesterday, remain in place. New vehicles were up 0.6% month-on-month and 10.4% year-on-year. Used cars were down 0.4% month-on-month, but up 6.6% year-on-year. Clothing fell 0.1% on the month but was up 5.1% on the year. Shelter prices rose 0.5% on the month and are up 5.7% on the year. Medical services are up 0.4% month-on-month, and up 5.1% year-on-year.

Today’s report was a good one, relatively speaking. It showed the anticipated moderation in inflation numbers, largely due to the big drop in commodity prices in July. This will heighten the talk of peak inflation. I hope that’s true, but I fear that we are far from solving the inflation problem. Energy prices plummeted in July largely because of China’s economic slowdown due to Covid restrictions, and due to fund fears of declining demand due to an impending recession here in the States. Grain and oilseed prices fell sharply largely due to this same fund manager recession fear, combined with a belief that U.S. 2022 crops would be in good shape. That sentiment is currently changing. The dollar index plummeted on the data’s release, while Treasury yields fell sharply as well. Trade sentiment reflected attitudes that inflation is now behind us, and that the Federal Reserve can reverse its hawkish positions. What scares me most is the fact that the Fed has repeatedly stated that it looked at people’s inflation expectations for making their decisions. These so-called “experts” are making monetary policy based on public perceptions of inflation. The public may perceive inflation is behind us because of a sharp downward correction in commodity prices, while the structural issues causing inflation are still in place, leading to poor policy decisions that end up costing us more down the road. I hope that the Fed understands that.

Grain and oilseed prices rallied again overnight on fears that this month’s weather is taking the top off the corn, soybean, and spring wheat crops. I still don’t see the conviction of the funds in this rally, so I’m still a bit skeptical on the scope of the current rally, even though I see the balance sheets tightening up later this fall when the combines give us better data on the crops. Additional support should come today from USDA’s flash sales announcement of another 7.2 million bushels of U.S. new-crop soybeans sold to China. The headlines are already moving past the Chinese military exercises offshore from Taiwan, even though that remains a significant longer-term threat. It didn’t take long for the market to get headline fatigue from the conflict. For now, the focus is on U.S. weather and its impact on the crops, as reflected in the weekly crop ratings. The two-week outlook moderated somewhat over the past 24 hours, but it still reflects a general warm pattern west of the Mississippi River, with rainfall below normal. We’ll see a possibility of shower nearly everywhere in the Midwest over the next two weeks, but the pattern is currently very disorganized in the forecast, with showers scattered hit-and-miss events. The threats remain greater for Europe’s corn crop, and we could see USDA trim some off China’s corn crop as well, although the August report may be a bit early for the agency to act on either one. The Pro Farmer Midwest Crop Tour may prove to be a significant event this year for the markets to get an idea of what’s going on in the Midwest – great in the east, not so in the west.

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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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