Perspective: Morning Commentary for December 13

By: Arlan Suderman, Chief Commodities Economist

Tue, 13 Dec 2022, 14:34

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 13 – Stock futures pushed higher again overnight, ahead of this morning’s inflation data release. Yet, they saved their best action for after the data release, with this morning’s numbers coming in better than expected. This gives the Federal Reserve plenty to contemplate as it begins two days of meetings to consider changes to its monetary policy. The VIX rallied to fresh four-week highs overnight, trading near 26 at one point, but then dropped to trade near 22 following the data release. The dollar broke sharply to fresh five-month lows, trading currently near 103.8. Yields on 10-year Treasuries are trading near 3.44%, while yields on 2-year Treasuries are trading near 4.15%, representing a sharp break in the yield curve inverse. Crude oil prices are 2% higher, while the grain and oilseed markets are higher as well. The market added to those gains on the data release as the dollar broke lower.

The consumer price index rose just 0.1% month-on-month in November, down from 0.4% the previous month and down from analyst expectations of 0.3%. The CPI was up 7.1% year-on-year in November, down from 7.7% in October, and below analyst expectations of 7.3%. The core CPI that excludes the more volatile food and energy prices rose 0.2% month-on-month in November, down from 0.3% the previous month, and below analyst expectations of 0.4%. The core CPI was up 6.0% year-on-year in November, down from 6.3% the previous month and below analyst expectations of 6.1%. Wall Street was ecstatic about the 7.1% headline inflation number, and about the 6.0% core CPI number. It’s not that these are good numbers by any means. But they are declining when the market was braced for stronger numbers following last week’s hotter-than-expected producer price index.

Breaking down today’s numbers, inflation at the consumer level came in better-than-expected due to declines in most energy products, used cars, and generally non-food commodities. For example, used car prices fell another 2.9% month-on-month, after falling 2.4% the previous month, and 1.1% the month prior to that. Gasoline prices were down 2.0% month-on-month, while commodities less food and energy were down 0.5% on the month. Used cars may very well continue to decline as demand softens, and energy prices may in the near-term as well. However, energy prices could still see considerable volatility in 2023 – particularly in the second half of the year as China’s economy starts surging again and global oil production struggles to restart again. On the other hand, there remains some significant areas of concern where inflation is still a significant problem. Food prices, both at home and away from home, 0.5% month-on-month, with fuel oil up 1.7%. Services less energy was up another 0.4% on the month, while shelter was up another 0.6%. The services sector is very labor dependent, where wage inflation remains a significant issue. The bottom line is that today’s numbers are good news, but they are not sufficient to say, “Mission Accomplished.” Our supply chain issues are slowly getting worked out, but we remain very vulnerable to inflation risks in the energy, food, and areas of labor concentration sectors. This is why I expect the Federal Reserve to raise its benchmark interest rate another 50 basis points as expected tomorrow, but to also indicate more rates ahead, and perhaps for longer than the market expects as well.

All domestic travel restrictions are now removed within China, following the elimination today of its phone tracking codes. All flights going in and out of Beijing are now at 70% of pre-pandemic levels as demand for travel rapidly increases. Travel for next month’s Lunar New Year holiday is expected to reach 80% of pre-pandemic levels, when 3 billion trips were made during the extended holiday period. China’s primary focus now is on the 500 million residents living in rural areas where the healthcare system is much less developed and where most residents are elderly and poorly prepared for the epidemic. Chinese authorities are also worried about labor shortages over the next month or two as Covid sweeps across the country, that could lead to additional supply chain disruptions. Some companies are splitting the workforce, while others are offering bonuses to those who work through the holidays next month. But the bottom line is that authorities simply do not know how the “release” of the virus as restrictions are lifted will end up impacting the economy over the next several months.

China bought another 27 cargoes of soybeans last week, filling its near-term shipment needs from the United States, along with some more new-crop supplies from South America. Chinese buyers have still been unable to acquire Argentine supplies being sold under its current “pesos for soybeans” program. It’s December shipment needs are met, with roughly 1.5 million metric tons yet needed to be covered for January shipment before its needs are expected to rely almost exclusively on new-crop Brazilian production. The broader commodity sector should see tail winds from a sharp break in the dollar today in an otherwise quiet news cycle. Argentina is drying out again following weekend rains. It will see periodic rains going forward, but those rains will still be lacking, with heat an issue. Brazil, on the other hand, continues to enjoy a favorable growing season for 85 – 90% of the grain belt. Grain continues to move out of Ukraine, although at a slower pace as the war wages on.

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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

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Matt ZellerWed, 05 Aug 2026, 12:39

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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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