Perspective: Morning Commentary for May 6

By: Arlan Suderman, Chief Commodities Economist

Fri, 06 May 2022, 13:42

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 6 – Wall Street continued its “no-confidence” selloff overnight as traders begin to doubt the Federal Reserve’s ability to adequately assess our nation’s economic situation, and then to apply the appropriate treatment. The markets stabilized for a bit this morning when the monthly jobs data came out, but sentiment at this hour remains anxious heading into the weekend. The VIX is trading near 33, reflecting those heightened fear levels. The dollar index is trading near 103.4, after hitting a fresh 19-year high near 104.1 overnight. Yields on 10-year Treasuries are trading near a new 3-1/2-year high 3.13%. Crude oil prices are roughly 1% higher this morning, while the Ags are mixed to weaker.

The U.S. economy added 428K non-farm jobs in April, matching the previous month’s gains, but above analyst expectations of 400K jobs added. The unemployment rate remained unchanged at 3.6%, with the jobs participation rate dropping to 62.2%, down from 62.4% the previous month. Average hourly earnings rose a bit less than expected at 0.3% month-on-month, down from 0.5% gains in March and below analyst expectations of 0.4%. Average hourly earnings are up 5.5% year-on-year as expected, which is down slightly from 5.6% the previous month. The average workweek remained unchanged at 34.6 hours in April.

Today’s data suggests that 5.9 million people remain unemployed in the United States, with close to twice that in posted job openings currently. Looking back at February 2020, the unemployment rate was 3.5%, with 5.7 million people unemployed, and very low wage inflation at the time. The number of long-term unemployed (jobless for 27 weeks or longer) was little changed in April at 1.5 million people. That’s up 362K from levels seen in February 2020, and it accounts for a quarter of all unemployed persons. The labor force participation rate at 62.2% is down 1.2% from where it was pre-pandemic. There were 4.0 million people employed part time for economic reasons in April, which is 357K fewer than in February 2020. There were 5.9 million people currently not in the labor force who currently want a job, which is up from 5.0 million pre-pandemic. They are not considered unemployed in the above data, because they’re not currently looking for work.

No less than six members of the Federal Open Market Committee are scheduled to speak today. These are members of the Federal Reserve policy board that unanimously voted to approve the revised statement released on Wednesday afternoon. Stocks surged following the statement’s release, before collapsing in a “no-confidence” vote. Traders lack confidence that the Federal Reserve has a sufficient grasp on the problems facing the economy, as well as on the appropriate prescription needed to give it a soft landing, creating the sell-off in stocks and Treasuries, while running to the strength of the U.S. dollar, and select commodities. Their appearances give the Fed the opportunity to suggest course changes in an attempt to regain the confidence of the markets if they are effective.

Ukraine reports that 30,530 rail wagons were heading to border checkpoints on Wednesday, up 31% month-on-month. It takes 35 days to pass through the Vadul Siret – Dornesti checkpoint and 22 days to make it through the Dyakovo – Halmeu check point: both on the Romanian border. However, it only takes 19 days to get through the Hrubieszow check point in Poland. Ukraine reports that a dozen oblasts – nearly half – have completed planting of early spring crops, with almost 80% of the “planned area” now planted. Remember that the planned area is reduced due to the war. The total includes 186.1K hectares of spring wheat, 853.8K hectares of spring barley, 1.977 million hectares of corn, 2.399 million hectares of sunflower seed, etc. It also reports that farmers applied nitrogen fertilizer to their winter crops. This would seem like an optimistic view relative to what we’re hearing from the ground.

Wheat and canola prices rallied from a bullishly construed Stats Canada stocks report this morning, showing lower inventories than expected. Meanwhile, corn and soybean prices came under pressure overnight from forecasts that continue to show the bulk of the Midwest drying out next week, with soils drying due to a significant warm up. In fact, many locations in the eastern half of the country will likely see record high temperatures for the date at times next week. Monday’s USDA weekly crop progress report is expected to show modest progress, but the following Monday should show significant planting progress across virtually all of the Corn Belt other than the Northern Plains and far northwestern Midwest. That’s where planting delays are expected to remain significant for spring wheat, corn and soybeans, accounting for between 20 – 25% of our nation’s corn production, depending on where the rains fall.

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Matt ZellerWed, 05 Aug 2026, 12:39

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Matt ZellerTue, 04 Aug 2026, 12:43

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Mike CastleMon, 03 Aug 2026, 15:10

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