Perspective: Morning Commentary for May 4

By: Arlan Suderman, Chief Commodities Economist

Thu, 04 May 2023, 13:32

Perspective: Morning Commentary

Guest Commentary by Mike Castle

Market Intelligence - Fertilizer Analyst

May 4 - Stock futures are pointing to a lower open this morning, adding to yesterday afternoon's weakness following the Fed's decision and commentary. The VIX has risen since yesterday afternoon to push past 19 as uncertainty increases. The dollar is clinging to small gains, trying to reverse course after sharp losses yesterday. Treasuries are slightly weaker to start the day, with 10-year yields hovering around 3.39% while 2-year yields trade near 3.87%. Weakness in crude oil continued overnight, though prices have rallied back from their lows with the nearby WTI contract trading near $68 at the time of writing, marking a roughly 10% drop this week. The ags are mostly lower to start the day after grain prices surged yesterday on the back of escalations in the Russia/Ukraine conflict.

The Fed opted to raise rates another 25 basis points yesterday, as expected, bringing its benchmark interest rate to a range of 5.00% - 5.25%. The real noteworthy takeaways came from Jerome Powell's comments in his subsequent press conference, as he dashed traders' hopes of rate cuts later in 2023 by saying that the committee has a view that "inflation is going to come down not so quickly" and that "it would not be appropriate to cut rates and we won't cut rates." Considering the Fed's actual comments over the past year, this really shouldn't have been that much of a surprise. Powell has been consistent in reiterating the Fed's commitment to battling inflation and not repeating the mistakes of 40+ years ago by pivoting too soon, but traders have continued to remain optimistic of a pivot by the Fed in the near future. While cuts look unlikely right now, the bright side for traders is that the Fed left out prior language of anticipating further rate hikes ahead in their statement, perhaps suggesting that they will now pause after yesterday's hike. This is no guarantee by any means, as Powell said "a decision on a pause was not made today" and said that the Fed was still "prepared to do more" when asked directly. He also suggested that a decision to pause will come at the June meeting, giving the committee time to digest upcoming economic data for signs of progress in the month ahead.

Initial jobless claims rose by 13K to reach 242K, coming in slightly above market expectations of 240K. This brings the 4-week average to 239.25K, an increase of 3.5K from the week prior in another potential sign of a softening labor market. Recent labor market data has been mixed, however, with today's continuing jobless claims falling by 38K week-on-week to reach 1.805 million. Additionally, Challenger Job Cuts in April were the lowest monthly level seen in 2023, falling 25.3% from the month prior to come in at 66,995. The retail sector saw the highest level of cuts, followed by the tech sector, and consumer products manufacturers. As we've heard previously, Powell's comments yesterday also pointed to the need to cool the labor market in order to tame inflation. With most recent data pointing to softening but some readings showing lingering strength, it will be interesting to keep an eye on tomorrow's Non Farm Payrolls data as well as more employment data in the month ahead.

Unit labor costs in the non farm business sector rose sharply in the first quarter of 2023 according to this morning's preliminary data, increasing at an annualized rate of 6.3%, well above expectations of a 5.5% increase. The prior quarter was also upwardly revised to show a 3.3% increase, pointing to more stubborn than expected wage inflation. In year-over-year terms, Q1 unit labor costs were up 5.8%, providing somewhat of a silver lining as this was a decline from the 6.3% year-over-year rise seen in Q4 of 2022. However, Q1 productivity also saw a worse than expected result, falling 2.7% from Q4 versus expectations of a milder 1.8% decline. The previous quarter was also downwardly revised to show a quarterly increase of 1.6%.

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Perspective: Morning Commentary for August 11

August 11 – It was generally a quiet night for the markets until early this morning when a headline hit that Iran and Oman were close to reaching a deal. Stock futures rallied, while the dollar index followed Treasury yields lower, along with active selling in the energy- and food-based commodities. The headline had limited impact though in a world that has become skeptical of promises of peace. Stock futures remain steady to firmer at this hour, while the VIX trades near 16 – just above 2026 lows. The dollar index is trading near 99.8 this morning, after recovering from its early morning selloff over the following hour of trade. Yields on 10-year Treasuries are trading near 4.69%, while yields on 2-year Treasuries trade near 4.22%. WTI crude oil is trading near $82 per barrel at this hour, while Brent trades near $88. The grain and oilseed markets are mostly weaker, after failing to recover from this morning’s early selloff that started in the crude oil market.

Arlan SudermanTue, 11 Aug 2026, 13:21

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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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