Perspective: Morning Commentary for February 17

By: Arlan Suderman, Chief Commodities Economist

Thu, 17 Feb 2022, 14:04

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

February 17 – Stocks are under pressure again this morning due to rising geopolitical risks, as traders quickly forget their optimism emerging from yesterday’s release of the minutes of the latest Federal Reserve meeting. The VIX is trading above 26 this morning, while the dollar index is trading near 95.8. Yields on 10-year Treasuries are trading near 1.98%. Money flow into the broader commodity sector was mixed, with crude oil prices modestly lower, while the Ags were mostly higher.

Tensions are again escalating along the Russia / Ukraine border amid charges that a) Russia is still building up troops along the border, b) Russia continues to set up military field hospitals and strategic weaponry, c) Russian sponsored cyberattacks are targeting Ukraine defense and banking interests and d) Russian-backed rebel forces are trying to provoke a Ukrainian response by shelling a kindergarten and engaging in other artillery fire to provide an excuse for Russia to invade. The above accusations illustrate the high level of tensions in the region that could very rapidly escalate at any moment. Russian President Putin currently controls the chess board. He’s moving the chess pieces while Ukraine and the West respond. I anticipate that he’s enjoying this sense of power, and only he knows the end game. However, reports that he is moving blood supplies into position suggests that the risk of war is relatively high. The challenge then would be to contain the war, and from the commodity market’s standpoint, limit the damage to trade infrastructure and production fields.

The Federal Reserve released the minutes of its January meeting on Wednesday afternoon, which provided a dose of reassurance to Wall Street that central bank policymakers were in general agreement on a plan. This was a sharp contrast to some of the public comments that had been made by policymakers prior to that meeting. Here’s what we know from the minutes. Policymakers agree that a) tapering will be complete by mid-March, b) the first of the rate hikes will likely be at the March meeting, c) shrinking of the balance sheet – withdrawing stimulus – needs to occur, and d) both the rate hikes and the balance sheet reductions need to be at a faster pace than the previous cycle. What we do not know is the rate of the increase in interest rates and the pace of the balance sheet reductions. In fact, this is the area where policymakers probably do not agree, but that’s not a surprise. That discussion will likely continue at the March meeting, as well as each meeting after that. But Wall Street traders took comfort in the fact that policymakers appeared to set aside their differences to work together on managing normalization of monetary policy. It’s still to be seen whether the Fed can successfully unwind what it has done over the past two years, but at least it appears to have a plan now. Wall Street found that reassuring.

First-time claims for unemployment benefits rose to 248K in the week ending February 12, up from 225K the previous week, and above analyst expectations of 224K. Yet, the four-week moving average dipped to 243.25K claims. Continuing claims for those longer-term unemployed fell 26K to 1.593 million in the week ending February 5. Other data showed that housing starts fell to an annualized rate of 1.638 million in January, down from 1.708 million in December and below analyst expectations of 1.708 million amid continued problems with supply chain problems for the industry. Permits for new homes rose to an annualized rate of 1.899 million in January, up from 1.885 million the previous month and above analyst expectations of 1.760. Analysts had expected that rising interest rates would have reduced permits for new starts, but they went up instead as people fear even higher rates down the road.

Exporters sold a net 106.1 million bushels of U.S. soybeans in the week ending February 10, with 50 million bushels of that demand being for old-crop supplies and the remainder for the crop yet to be planted this year. China and “unknown destinations” (which the market will believe to be China) combined for net 21.9 million bushels of the old-crop soybean demand, along with 51.7 million bushels of the new-crop purchases. This reinforces concerns about global soybean supplies as production estimates in South America continue to trend lower. U.S. Gulf bids continue to be cheaper than Brazilian supplies for May and June, although Brazil still enjoys enough of a freight advantage to remain competitive. We still see little confirmation of Chinese corn buying, although it has notably stepped-up shipment of the large quantities of purchases it already had on the books from early last year, while also being active in the U.S. grain sorghum market. Corn traders must respect gains in the soybean market, while the feed grain, along with wheat, are also keeping a close eye on the geopolitical risks seen in the Black Sea. Reports of shortages of crop chemicals are also increasing, raising concerns for the summer row crops globally.

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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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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: 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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