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Perspective: Morning Commentary for November 4

Mike Castle
Mike Castle

Market Intelligence - Fertilizer Analyst

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November 4 – Stock futures saw an unusually wide overnight trading range as the results of the U.S. midterm elections came in but are pointing to a sharply positive open to kick off the day, though we may be seeing a flow of money out of tech and into other sectors as policy expectations shift. For reference, tech heavy Nasdaq futures are up only 0.4% at the time of writing, while Dow Jones futures are up 2.2%, and S&P 500 futures are up 1.2%. Markets have often viewed divided government favorably, as political gridlock can limit major policy swings and provide businesses with a more predictable regulatory and fiscal environment. A unified government, by contrast, increases the likelihood that more of the governing party's agenda can be enacted, as we’ve seen demonstrated rather clearly since the beginning of 2025. With that said, the VIX has also fallen sharply this morning, currently down 13% on the day to hang near the 18 level. The dollar is sharply lower to start the day as well, currently down 0.5% to trade near 101.35, potentially a sign of investors heading back into risk-on mode with the election uncertainty behind us, as well as the potential for less aggressive tariff and Middle East policy. Treasury yields are quietly lower, with 2-year yields at 4.60%, 10-year yields at 4.92%, and 30-year yields at 5.303%. With the midterms out of the way, we’ve removed a major layer of noise, hopefully putting us back in a position where financial markets can begin shifting their focus from this uncertainty back toward economic fundamentals, policy implementation, and corporate earnings.

Crude oil is starting the day lower, with one of the biggest questions following the midterm elections being the how the results could impact the ongoing Iran war, with nearby WTI down 3.6% on the day to trade near $93.30 and nearby Brent down 2.75% to trade near $100.75 at the time of writing. Markets are clearly interpreting the Democratic sweep as a potential check on expansion of U.S. military operations in the Middle East, but it’s important to keep in mind that the eight months of this conflict we’ve already seen have all come without Congressional approval. Furthermore, the new Congress will not take office until January 3. Until then, the administration retains significant latitude in conducting military and foreign affairs, suggesting that developments on the ground in the Middle East are likely to remain a more important driver for energy markets than the election outcome itself. Obviously, one of the main focuses of energy markets over the last few weeks in particular has been the ramp-up in escalatory rhetoric and repeated threats of resuming large-scale strikes on Iran, including energy targets, after the midterm elections. We’re now in that window and will need to see what comes next. Fighting on the ground continues to rage in Yemen, while the IRGC is claiming multiple oil tankers hit mines in the Strait of Hormuz overnight, also adding that two other vessels had been seized—none of that has been verified at this point to my knowledge, however, so I would treat these claims with a heavy dose of skepticism. The lack of a pop in crude oil markets following this headline suggests traders are doing exactly that.

The ags are mixed at the break, with soybeans seeing the biggest decline and the wheat complex slightly in the green. The latter may be a reflection of one of the other big policy questions after the midterm results—the U.S. relationship with Russia and potential path toward ending the conflict by intensifying pressure on Ukraine to concede. Trilateral talks are set to take place in the U.A.E. next week (11/10-11/11), with the biggest question for commodity markets being whether or not we see some form of arrangement made to allow commodity flow from the Black Sea to resume. I remain skeptical that such as arrangement is on its way in the near-term, as Russian officials have repeatedly indicated they see little prospect for restoring the original Black Sea Grain Initiative and continue to tie any future maritime arrangement to wider issues involving sanctions and agricultural trade. Regardless, it’s still a positive to see the talks resuming, and traders will need to follow the results of said talks closely. On the ground, however, we continue to see intense fighting and back-and-forth strikes on one another’s energy infrastructure, another signal that expectations for any near-term end to the conflict remain minimal.

Average 30-year mortgage rates fell to 7.30% in the week ending October 30, their third consecutive weekly decline as they’ve continued to track 10-year Treasury yields lower since their recent peak roughly a month ago. Despite the drop, overall mortgage application volume fell 1.2% week-on-week, reversing course from the 3.4% rise in the week prior that broke a streak of seven consecutive weekly declines. Interestingly, the weakness was driven by a 2.0% week-on-week drop in new purchase applications more than offsetting a 0.1% rise in refinancing applications. That drop in new purchases brings the index only 2.2 points higher than the nearly two-year low set two weeks ago, reflecting a backdrop of ongoing sluggish demand in the housing market as large swaths of prospective buyers struggle with affordability.

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Perspective: Morning Commentary for November 4

November 4 – Stock futures saw an unusually wide overnight trading range as the results of the U.S. midterm elections came in but are pointing to a sharply positive open to kick off the day, though we may be seeing a flow of money out of tech and into other sectors as policy expectations shift. For reference, tech heavy Nasdaq futures are up only 0.4% at the time of writing, while Dow Jones futures are up 2.2%, and S&P 500 futures are up 1.2%. Markets have often viewed divided government favorably, as political gridlock can limit major policy swings and provide businesses with a more predictable regulatory and fiscal environment. A unified government, by contrast, increases the likelihood that more of the governing party's agenda can be enacted, as we’ve seen demonstrated rather clearly since the beginning of 2025. With that said, the VIX has also fallen sharply this morning, currently down 13% on the day to hang near the 18 level. The dollar is sharply lower to start the day as well, currently down 0.5% to trade near 101.35, potentially a sign of investors heading back into risk-on mode with the election uncertainty behind us, as well as the potential for less aggressive tariff and Middle East policy. Treasury yields are quietly lower, with 2-year yields at 4.60%, 10-year yields at 4.92%, and 30-year yields at 5.303%. With the midterms out of the way, we’ve removed a major layer of noise, hopefully putting us back in a position where financial markets can begin shifting their focus from this uncertainty back toward economic fundamentals, policy implementation, and corporate earnings.

Mike Castle
Mike Castle
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Perspective: Morning Commentary for November 3

November 3 – It’s election day in the U.S., with the corresponding geopolitical uncertainty looking to drive a day of volatile, headline-driven trade. Stock futures are pointing to a mixed open, with the Nasdaq hoping to find some turnaround Tuesday action to stop the bleeding from the recent selloff that has battered the tech sector and drove the index to its lowest close since late July yesterday. The VIX is off its overnight highs but remains elevated, hovering near 20.8 at the time of writing. The dollar is effectively unchanged to start the day, trading at 101.82. Treasury yields are quietly higher after their recent slide that has coincided with the selloff in the equities, particularly tech, potentially signaling some investors fleeing to safe havens, with 2-year yields at 4.585%, 10-year yields at 4.919%, and 30-year yields at 5.294% this morning. Meanwhile, the ags are mostly lower at the break.

Mike Castle
Mike Castle
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Perspective: Morning Commentary for November 2

November 2 – Stocks are looking to bounce back after Friday’s ugly selloff, with the tech heavy Nasdaq showing the sharpest gains after posting the sharpest losses last week. The VIX touched a nearly seven-month high on Friday but has reversed course sharply since, down another 2% to start the day near the 19 level. The dollar touched a one-month low overnight but has recovered since, currently hovering near 101.61. Treasury yields are notably mixed to kick off the week, with 2-year yields up 2-basis points to sit at 4.60%, while 10-year yields are down over 2-basis points to sit at 4.905%, and 30-year yields are down nearly 4-basis points to trade at 5.272%. The ags are largely mixed at the break, with corn and wheat clinging to small gains while soybeans show small losses. It will be interesting to see if more strength will be seen at the open after a massive 1.730 million metric ton (68.1 million bushel) flash sale of U.S. corn to Mexico was just announced, as well as another 136k metric tons (5.0 million bushels) of soybeans to China. Amid the sharp break lower in prices, these are the kind of signals these markets need to see to stop the bleeding.

Mike Castle
Mike Castle
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