Perspective: Morning Commentary for February 8

By: Arlan Suderman, Chief Commodities Economist

Wed, 08 Feb 2023, 14:24

Perspective: Morning Commentary

Matt Zeller

Senior Market Intelligence Analyst

February 8 – Stock futures were a bit weaker overnight, following a generally positive response to an interview with Federal Reserve Chair Jerome Powell on Tuesday. Even so, the market continues to digest mixed signals it is getting from the data and from the Fed, although I should note that no fewer than five members of the Federal Open Market Committee will step in front of a microphone today, any one of which could make headlines to drive the market one way or the other. The VIX is trading near 19 this morning, reflecting a general sense of calm on Wall Street. The dollar index is trading near 103.3, following several days of significant gains on the currency market. Yields on 10-year Treasuries are trading near 3.66% this morning, while yields on 2-year Treasuries are trading near 4.45%. Crude oil prices are 1% higher on signs of declining inventories, pushing prices back into the middle of the trading range that has largely contained the market over the past couple of months. Grain and oilseed prices were generally positive overnight, led by strength in soybeans as traders focus a bit more on the short crop in Argentina, and strength in the soymeal market.

Fed Chair Jerome Powell generally says what the market wants to hear. There have been exceptions, like the notorious eight-minute Jackson Hole speech, but generally he throws in nuggets that the markets want to hear. He may intersperse many other comments that traders don’t want to hear, but they tend to gravitate toward those sound bites that best fit what they want to hear. He did so again yesterday in a broadcast media interview. The comment traders wanted to hear was, “The disinflation process has begun.” Powell insinuated that we should see significant improvement in inflation this year, which brought strength to the equities. His tone was calm, giving few signals for concern about the state of the economy, which amplified his words of lowering inflation.

But Powell made other statements as well. He indicated that this will be a long process – the taming of inflation. Much of the improvement seen in inflation is a product of declining commodity prices and improving supply chains. But taming inflation means bringing that number down to the mandated 2% level. That cannot happen without taming inflation in the service sector, where Powell acknowledged that its monetary tightening thus far has barely made a dent in inflation. The service sector is heavily labor dependent. Powell emphasized that bringing inflation down in this sector requires taming wage inflation, and he pointed out that Friday’s robust jobs report was an example of the great work that still needs to happen. Taming wage inflation necessitates bringing the number of available workers into balance with the number of open positions, which is currently near record high above 11 million. The Fed has very few tools in its toolbox to increase the supply of workers, so the only thing that it can do is reduce the demand for workers. That means inflicting more pain on the economy so that businesses quit hiring. Friday’s jobs report suggests that we’re heading in the wrong direction to accomplish that. Wall Street heard everything that Powell said. Traders know that the central bank is zeroing in on wage inflation and the need to bring it down. Wall Street just doesn’t believe that the members of the FOMC will have the courage to do so in the face of declining markets and negative economic headlines. The Feds credibility is on the line with how it responds.

Bunge CEO Greg Heckman caught the attention of commodity traders this morning when he stated his expectation that tight global crop supplies, strong meal and vegetable oil demand, volatile prices, and supply chain woes will continue through this year, and I would tend to agree. Heckman also said that Argentina’s drought-stricken soybean crop may be in the mid-30s million tonnes, down from 44 mmt last year. This is part of the justification for some fund managers to direct more money into the commodities to start the new calendar year. The focus over the last half of 2022 was on declining demand expectations as recession worries grew around the world. The markets removed much if not all of the Ukraine war risk premium, even though those risks may actually be ramping up. China is expected to rebound from three years of Covid lockdowns and restrictions this year, increasing its consumption of several critical commodities that are in relatively tight supply on the global balance sheet. Friday’s jobs report was reflective of a strong economy needing more commodities as well, despite fears to the contrary. The dollar is also at a pivotal point currently, whereas a resumption of its recent downward trend would argue for commodity inflation pressure. Today’s market will be focused on USDA’s monthly WASDE crop report. How far will USDA go in reducing the size of Argentina’s corn and soybean crops, and what changes will that create in U.S. export projections? The market is currently expecting Argentina’s corn and soybean crops to both come down several million more metric tons. How we finish today will tell us a great deal about shifting sentiment in the commodity markets.

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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: Mid-Day Commentary for August 6

August 6 – Stocks remain quietly mixed at midday as both the S&P 500 and Dow Jones remain just below their fresh all-time highs put in yesterday. This is allowing the VIX to cool to a four-week low below the 15.4 mark, reflecting the collective sigh of relief in the market amid largely better than expected U.S. economic data today. The dollar remains quietly in the green in its relatively tight range this week, trading at 99.9 at the time of writing. Treasuries remain elevated but have cooled from their recent peaks, with 30-year yields trading at 5.189%, 10-year yields trading at 4.647%, and 2-year yields trading at 4.229% at midday. Crude oil also remains quietly in the green, with nearby WTI up 2.3% on the day trading near $76.80 and nearby Brent up 2.4% on the day trading near $81.40. The ags remain mixed, with the wheat complex now squarely in the red while corn and soybeans cling to small gains, and the livestock complex largely pushes lower.

Mike CastleThu, 06 Aug 2026, 15:18

Grains & Oilseeds

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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