Perspective: Morning Commentary for August 31

By: Arlan Suderman, Chief Commodities Economist

Wed, 31 Aug 2022, 13:25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 31 – Stock futures entered the morning with modest gains, after trading both sides of unchanged this morning, even as traders digest the latest jobs numbers. The VIX is trading near 26 this morning, reflecting a slight easing of anxiety levels on Wall Street. The dollar index is trading near 108.8 this morning – just below two-decade highs set earlier in the week. Yields on 10-year Treasuries inched higher to trade at fresh two-month highs above 3.16% earlier this morning, before easing back. Meanwhile, yields on 2-year Treasuries traded just above 3.50% before pulling back. Crude oil prices are trading nearly 2% lower in a broader commodity sell-off, as the recession trade gains momentum again, while the grain and oilseed markets were generally 1 – 2% lower.

The jobs market softened this month, according to data released this morning by Automated Data Processing, Inc. ADP reports that the private sector added 132K jobs in August, down from 270K in July. Analysts expected the number to come in near 225K, so the decline was more than expected. Today’s data sets the tone for the government’s monthly jobs report on Friday, which is expected to show that the economy created 293K non-farm payroll jobs in August, down from 528K in July. The unemployment rate is expected to remain unchanged at a very low 3.5% for August, with hourly earnings ticking higher to 5.3% year-on-year.

Tensions continue to escalate between China and Taiwan, and therefore also between China and the United States, which has thrown its support behind the island nation. China continues to conduct various military maneuvers and exercises close enough to Taiwan to provoke it with intimidation moves. Taiwan is responding by dramatically increasing its defense budget. Furthermore, it shot at a Chinese drone yesterday – the same day as China announced the date for its 20^th meeting of Congress to re-elect President Xi Jinping. Taiwan did not hit the drone, so its actions are considered a warning shot. But the warning is seen as a provocation by China, which is expected to further intensify its pressure on Taiwan.

China’s manufacturing sector continues to contract this month, albeit the data was slightly better than the previous month. Today’s official manufacturing purchasing managers index (PMI) firmed 0.4 points to 49.4 for August, whereas anything below 50 indicates contraction. There’s growing optimism within China that authorities may abandon their zero-tolerance policy toward Covid after the 20^th Congress convenes on October 16 to reappoint President Xi Jinping, but that’s largely speculation at this point. Meanwhile, the economic slowdown continues to encourage foreign capital to flow out of China. China’s economy thrives on the back of foreign investment. As such, policymakers are scurrying to make policy adjustments to reassure foreign investors. Their ability to do so, or lack thereof, will ultimately shape the future of the Chinese economy, as well as its role in the world.

Russia continues to strike Ukrainian grain storage facilities at the ports, particularly at Mykolaiv. Another strike took place at Ukraine’s second largest port on Tuesday, damaging grain storage facilities and initiating a fire that was still burning today. Photos from the area show holes in the roofs of at least two grain storage facilities. Mykolaiv is relatively close to the frontline fighting between Russian and Ukrainian troops, which is currently focused on Kherson and the Zaporizhzhia nuclear plant. U.N. inspectors were expected to arrive today at the Russian held nuclear facility, which is Europe’s largest nuclear plant. They want to ensure the safety and security of the plant following recent military strikes on the facility. The fear is that a misguided shell could damage the facility in a way that would create leakage of radiation material – or worse – a nuclear meltdown similar to what occurred at Chernobyl in 1986. Such an incident could contaminate vast areas of cropland in the region if it were to occur.

The recession trade continues to dominate money flow in both the energy and grain and oilseed sectors this morning. This thinking is based on expectations that the Fed’s hawkish stance will sufficiently slow the economy to reduce demand for these commodities below their respective supply levels. It’s been the predominant thinking on Wall Street since mid-June during times when actual fundamental news was lacking. StoneX will be releasing its updated corn and soybean yield estimates based on its monthly customer survey on Thursday afternoon after the markets close, with other private estimates to come in the days following. Confidence is growing that this year’s national corn crop will come in below trend yields, but the debate continues over the scope of those losses. Traders are less sure that the soybean crop will come in below trend, although that cannot yet be ruled out.

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This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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Perspective: Morning Commentary for August 5

August 5 – U.S. equities markets are on fire this week, with both the Dow Jones and S&P 500 setting new all-time highs yesterday with futures indicating further gains again today; the marketplace remains optimistic over a deal with Iran despite no evidence of such as of yet. Crude oil is working on a lower high and low today but remains slightly on the high side on the session, while the dollar is retreating back towards Monday’s nearly two-month low. The ten-year note is steady-to-lower this morning (though solidly lower so far this month) at 4.605%, while the VIX index continues to rebound into mid-week at almost a 17-point reading this morning.

Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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