Perspective: Morning Commentary for May 12

By: Arlan Suderman, Chief Commodities Economist

Thu, 12 May 2022, 13:26

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 12 – It’s Day #2 for inflation data today. Yesterday’s focus was on inflation at the consumer level, while today’s data focuses on the producer level. It was a roller coaster ride for money flow on Wednesday, but the bottom line was continued selling on a lack of confidence in policymakers as stocks closed near session lows, while commodity prices found a good buy – especially many of the food and energy commodities that both have a fundamental story, and which also have been seen as a hedge against inflation. The VIX traded near 35 again overnight, reflecting heightened levels of anxiety ahead of the inflation data release, while the dollar spiked to a fresh 19-year high above 104.7. That combination created headwinds for the commodities, with the Ags also cautious ahead of today’s big USDA WASDE crop report, which is probably the second biggest report of the year that frequently contains surprises. The dollar is trading near 104.4 at this hour, while yields on 10-year Treasuries are trading near 2.86%. Crude oil prices are mixed, while most of the Ags are modestly lower.

The producer price index rose 0.5% month-on-month in April, matching analyst expectations. However, the March number was revised to an increase of 1.6% month-on-month, up from the 1.4% originally reported. The PPI was up 11.0% year-on-year in April, which was down from 11.2% the previous month, but it exceeded analyst expectations that it would be up 10.7%. The core PPI that excludes the more volatile food and energy components rose 0.4% month-on-month in April, falling short of analyst expectations of 0.6% gains. March was revised to 1.2% gains, up from the 1.0% gains originally reported. The core PPI rose 8.8% year-on-year in April, which was slightly below analyst expectations of 8.9%, and below the 9.2% seen the previous month. Today’s produce price data fits a bit better with expectations that the year-on-year numbers would start to moderate over the next several months when compared to year ago levels that were in the process of rising, but the moderation overall is a bit less than expected.

The bottom line again is that the headline numbers may be moderating as expected, but inflation overall appears well entrenched into the economy. History tells us that 50-basis point rate hikes won’t do the job of taming inflation, nor will the slow process of shrinking the balance sheet. The problem is though that the economy is slowing, making it even more difficult for the Fed to get more aggressive on fighting inflation. I do not currently see us on a path of an economic collapse, but rather on a sluggish grind of stagflation, where the economy slips into an extended period of sluggish growth and high inflation. Treasury yields remain negative relative to the pace of inflation, stocks are struggling, and money flows toward the hard assets that have a fundamental story.

First-time claims for unemployment benefits totaled 203K in the week ending May 7, up slightly from 202K the previous week, but above analyst expectations of 190K claims. That pushed the four-week moving average to 192.75K claims, up from 188.5K the previous week. Continuing claims of those long-term unemployed unable to find a job fell another 44K to 1.343 million, which is the lowest level for this indicator since January 3, 1970, when it was 1.332 million. We’ve seen a bump in weekly claims in recent weeks, although those numbers remain within historical norms, while the longer-term numbers continue to suggest a very tight labor market that continues to support ongoing wage inflation pressures. Slowing wage inflation will likely require pushing unemployment higher, which means some degree of pain for the economy, unless policymakers can encourage a larger increase in the labor force participation rate to bring more people back to work.

USDA reports that exporters sold 24.1 million bushels of U.S. corn to China overnight, with 21.4 million bushels of that total designated for new-crop delivery in the next marketing year. The news followed USDA’s weekly export sales report that showed many commodity sales at marketing year lows for the week ending May 5. Unlike many other times this year, we did not see a pop in grain and oilseed prices when the inflation data came out today, but that may have been because it coincided with that dismal weekly export sales report, and because traders are being cautious ahead of today’s highly anticipated USDA WASDE crop report. I expect USDA to continue to tighten the old-crop soybean balance sheet in today’s report, but I think the bulls will be lacking for a lot of other fodder in today’s numbers, based on my experience of how USDA creates these reports. Soybeans have the best shot at growing their way out of tight supplies over the coming year if the weather cooperates. Corn supplies are probably most at risk of getting tighter in the months ahead, although wheat isn’t out of the woods yet either. Rains start increasing again in the Midwest as we move through the weekend and into next week, and temperatures moderate.

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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

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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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