Perspective: Morning Commentary for May 26

By: Arlan Suderman, Chief Commodities Economist

Thu, 26 May 2022, 13:27

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 26 – Follow-through buying supported stock futures overnight, ahead of this morning’s updated data on our economy’s growth, or lack thereof, in the first quarter of this year. Traders are also talking about the content of the minutes of the early May Federal Reserve policy meeting that were released Wednesday afternoon. The VIX slipped lower to trade near 28 this morning, while the dollar index is trading near 102.0. Yields on 10-year Treasuries are trading near 2.74% this morning. Crude oil prices are 1% higher, while the Ags were again under pressure as traders contemplate the possibility of Ukrainian exports.

Gross domestic product, which is our way of measuring the output of our economy, fell 1.5% year-on-year in the first quarter of this year in the second reading of GDP for the quarter. That’s down from the initial reading of 1.3% contraction released last month, and even worse than the 1.4% contraction anticipated by analysts. Personal consumption expenditures grew 3.1% year-on-year in the first quarter, up from the initial reading of 2.7%, and up from analyst expectations of 3.0%. So, the consumer was spending at a faster pace, largely due to inflation pushing prices upward, while the economy contracted.

First-time claims for unemployment benefits fell to 210K in the week ending May 21, down from 218K the previous week, although still above the 208K anticipated by analysts. This put the four-week moving average at 206.75K claims, up from 199.5K the previous week. Continuing claims rose 31K to 1.346 million in the week ending May 14, while the four-week average for continuing claims fell 14,250 to 1.3475 million, which is its lowest level since January 17, 1970. Some analysts are starting to say that we’re seeing the early stages in a rise in unemployment. Ironically, that is something that needs to happen to tame wage inflation. We may indeed be seeing the early signs of a turn in the jobs market, but far more data is needed to confirm that. This may simply be the ebb and flow of data. Nonetheless, it puts a bit more focus on next week’s monthly jobs report.

There were few surprises in the minutes of the Fed’s May policy meeting that were released yesterday, but there was one point of debate for Wall Street traders and economists. The minutes indicate that the Fed intends to continue its 50-basis point rate hikes through the next two meetings, taking the benchmark rate to 175-200 by the July meeting. It is then considering taking a break in the pace of rate hikes ahead of the mid-term elections. That would be yet another step in delaying pushing interest rates to neutral, and delay getting interest rates above the rate of inflation, which could further intensify the inflation problem at hand. The Fed doesn’t want to appear political, so once again it’s going to make itself political by trying to stay apolitical. This puts even more focus on tomorrow’s PCE inflation data, which the Fed puts its highest trust in for policy making. Frankly, the Fed painted itself in a corner by waiting so long to act, convinced that the inflation was transitory when it was not. It now has few good options, and that is what worries Wall Street. It’s interesting to note that the markets are still pricing in expectations that the Fed’s benchmark rate will be 250-275 basis points by the December meeting, as the Fed becomes forced by the data to raise rates more than it would prefer. Of course, another piece of this puzzle is the indirect impact on interest rates that is accomplished by shrinking the balance sheet, as I outlined previously this week.

Grain and oilseed prices were again under pressure overnight as fund managers fretted over reports that Russia was willing to open up a couple of safe-passage corridors for seven Ukraine ports to export food-based commodities in return for a partial lifting of sanctions against Russia. U.S. State Department spokesperson Ned Price stated in a press briefing yesterday that “we certainly won’t lift our sanctions in response to empty promises, and we’ve heard empty promises before from the Russian Federation. I think we have – all have good reason to be skeptical when we hear various pledges and offers from Russia.” Nonetheless, Turkey continues to negotiate with Russia and Ukraine to see if a corridor for the movement of food can be opened. Ukraine is estimated to have 20 million metric tons of grains trapped in its ports by the Russian blockade. Fund managers are hedging their risk, with prices just below record levels in many cases, taking profits just in case Ukrainian grain does start to move. I think a healthy dose of skepticism is appropriate here though. Some say that Russia is giving in to domestic and international pressure for causing a global humanitarian crisis, but that doesn’t fit President Putin’s mode of operation. Putin would be reversing one of his primary stated objectives for shutting off Ukraine’s ability to engage in commerce via the ports – essentially admitting failure.

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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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