Perspective: Morning Commentary for December 29

By: Arlan Suderman, Chief Commodities Economist

Thu, 29 Dec 2022, 14:19

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 29 – Stock futures are again cautiously higher to start trade today, as traders balance recession fears with optimism about China reopening in the months ahead, while squaring their positions to close their books for 2022. The VIX continues to consolidate near 22 this morning, indicating lingering low levels of fear on Wall Street. The dollar index is trading near 104.0. Yields on 10-year Treasuries continue to rise, trading near 3.88%, slowly closing the big gap with yields on 2-year yields that are trading near 4.37%. That suggests that more people on Wall Street are starting to take the Fed’s promise to raise rates higher and longer than previously expected at their word. Crude oil prices are down roughly 1% in broad weakness for the commodity sector this morning on recession fears, with grain and oilseed prices modestly weaker this morning as well.

First-time claims for unemployment benefits rose to 225K in the week ending December 24, up from 216K the previous week and above analyst expectations of 222K. Yet, the four-week moving average slipped to 221K claims, down from 221.25K the previous week. Continuing claims for the week ending December 17 rose 41K to 1.710 million. This is a number that remains at historically low levels, but it’s slowly rising. That is unfortunate for the people behind those numbers, but it’s an essential part of tackling wage inflation by bringing the number of job openings into better balance with the number of job seekers.

The United States will require a negative Covid test before people can enter the country from China starting January 5^th. Data released within China indicates that the infection rate in Sichuan province exceeded 63.5%, with 38.6% of the patients showing symptoms for more than five days, and the majority of those over 65 years of age experiencing symptoms for more than 10 days. A growing number of people have recovered from Covid and are making plans to travel for the upcoming Spring Festival, which we typically attach to the Lunar New Year holiday. The people of China made more than 3 billion trips during the holiday in 2019, but only 1 billion during the Covid restrictions a year ago. It’s looking more likely that we will see a significant rebound in China’s economy starting at some point early next year, raising hopes for increased commodity demand in the months ahead.

It’s getting more expensive to do business with Ukraine. Ships carrying cargo usually carry P&I (protection and indemnity) insurance coverage to protect them from significant loss. The insurance companies providing the protection lean on reinsurance companies to back them with policies that renew each January 1^st. The reinsurance companies declared that they no longer would provide protection from war-related risks in the Black Sea region. As such, P&I clubs American, North, UK and West are no longer able to offer war risk coverage for some liabilities in the Black Sea region after Saturday. These clubs cover roughly 90% of the world’s ocean-going ships. It had previously been reported that those shipping companies participating in the grain initiative that allows cargoes to leave three approved Ukraine ports were pooling their coverage to self-protect each other, but it now appears that will not be sufficient. Yes, some shippers will find their own coverage, or perhaps go un-insured if they can charge the customer a large enough risk premium. Either way, freight costs are going up. Grain will flow via those willing to take the risk, as the opportunity will exist to make good money as long as nothing happens. However, we’ll likely see fewer players willing to participate, and those that do will do so at a higher cost. As for grain leaving Russia, a lot of Russian companies have their own fleet, or have other solutions for dealing with the restrictions. As such, Russian grain will likely continue to flow. This works to Russia’s advantage.

2022 was a year of geopolitical realignment. Russia’s invasion of Ukraine made countries pick sides. If they said they were neutral, they had picked a side. The side you picked determined who you did or did not do business with. Global trade was no longer determined by the efficiency of trade routes, but by the side you chose. That raises the costs of freight, with shipping lanes lengthened, while reducing the overall available supply of commodities. Countries were no longer comfortable with just-in-time supplies, which had become the norm in recent years. This created increased demand, and a great deal of uncertainty. That uncertainty created a great environment for Algo traders, who came to dominate trade as traditional speculative traders stepped to the sideline in many commodities, unwilling to trade the highly volatile markets. 2022 was also the year of the Fed, with the central bank raising its benchmark interest rate 425 basis points during the year, raising the cost of holding positions within the market, while increasing fears of a recession in the year ahead.

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Perspective: Morning Commentary for August 10

August 10 – The world commodity markets and economy remains at risk amid two wars this morning. Tensions continue to escalate in both the Middle East and the Black Sea – risking pulling other countries into the conflicts. Stocks are down modestly this morning as we start a week of trade in which we’ll see key inflation and retail sales data following a weak jobs report this past Friday. Yet, stocks continue to trade just below record high levels, with the VIX trading near 2026 lows just above 15. The dollar index is trading near 99.7. Yields on 10-year Treasuries are trading near 4.68%, while yields on 2-year Treasuries are trading near 4.23%. The energy and food-based markets are firmer today amid the escalated risks. WTI crude oil is trading near $80, while Brent trades near $85 per barrel. Double-digit gains in the winter wheat markets lead the way for higher grain and oilseed prices.

Arlan SudermanMon, 10 Aug 2026, 13:51

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Perspective: Mid-Day Commentary for August 7

August 7 – Stocks are looking to end a strong week on a strong note, with the major indexes all in the green at the time of writing. The VIX touched a nearly seven-month low earlier in the session and remains muted as it hovers just below the 15-mark as this morning’s ugly labor market data helps ease hawkish Fed jitters. The dollar has rebounded from its nearly two-month low earlier in the session but remains in the red on the day, trading at 99.55 at the time of writing. Treasuries have had a very volatile day, with yields tanking following this morning’s Non-Farm Payrolls release but bouncing back into midday, with 30-year yields now trading at 5.209%, 10-year yields trading at 4.654%, and 2-year yields trading at 4.204%. Crude oil has risen from the morning lows as traders eye the weekend market closure for potential geopolitical developments, with nearby WTI now down only 0.2% on the day to trade around $78.10 and nearby Brent breaking into the green, up 1.25% on the day to trade above $83.50. The ags are largely mixed, with the grains and oilseeds mostly in the green, save for a mixed picture in the soy complex, while live and feeder cattle futures move in opposite directions, with the former adding to yesterday’s sharp losses and the latter attempting a rebound.

Mike CastleFri, 07 Aug 2026, 17:09

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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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