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Perspective: Morning Commentary for October 5

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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October 5 – It’s a relatively light week of economic data, so geopolitics will likely remain in focus. Stock futures are pointing to a quietly mixed open to kick off the week as they await the next headline, with the VIX rebounding from Friday’s drop to hang in the middle of last week’s range, sitting just above 16.1 at the time of writing. The dollar has carved out another 18-month high, pushing above 102.5 overnight and remaining up ~0.3% on the day to trade near 102.25 at present. Treasury yields are modestly higher to start the day, with 2-year yields trading at 4.835%, 10-year yields at 5.305%, and 30-year yields at 5.66%. Crude oil prices are modestly lower this morning, with nearby WTI down roughly 2% to trade near $89.40 but Brent down a much more modest 0.1% to trade near $102.10. The ags are mostly higher to start the day, looking to claw back some of last week’s sharp losses.

It’s election season for much of the world, as Brazil held the first round of its presidential election over the weekend, with Flavio Bolsonaro finishing slightly ahead of the incumbent Luiz Inacio Lula da Silva but neither candidate surpassing the 50% threshold, setting up a runoff scheduled for October 25. The U.S. midterms will follow this closely, scheduled for November 3, with major implications for U.S. policy moving into 2027. Spain’s Prime Minister Pedro Sanchez today announced an early election scheduled for November 29, a potential gamble amid the country’s housing crisis that has triggered widespread protests. This also brings additional focus to the E.U. more broadly, a theme likely to stick around into 2027 with more notable elections on tap in the year ahead. The political risk in the E.U. is becoming increasingly centered on fiscal policy, with traders closely watching these elections for signals of prospective new governments’ willingness to pursue deficit reduction and debt stabilization or instead favor higher spending that could place renewed pressure on E.U. bond markets and sovereign borrowing costs. While much of our focus on the bond market has centered on the U.S., it’s worth noting that this is a much more global phenomenon, with E.U. member countries in focus as well. The Euro has fallen sharply in the last month, with an ugly selloff today as well, pushing the currency to its lowest value versus the dollar in nearly a year-and-a-half. Given their reliance on energy imports, the ongoing geopolitical disruptions to supply from both the Middle East and Black Sea will have an impact as well.

Saudi-backed Yemeni government forces announced a major offensive over the weekend aimed at re-claiming the wide swaths of territory the Houthis have recently gained, with Yemen’s Presidential Leadership Council Chairman Rashad al-Alimi stating: “the armed forces will press the offensive until the country is liberated from the grip of the terrorist militia.“ From a market perspective, the most critical factor in this conflict is control over the Bab al-Mandeb Strait, with the Houthis’ grip tightening following their capture of not just the coastline, but also multiple islands within the Strait itself and its northern entrance. The announcement marks the clearest signal yet that the conflict is entering a more expansive phase, raising the risk of further disruption around the Bab al-Mandeb shipping corridor and additional attacks on Saudi energy infrastructure. It appears the Saudi’s are willing to risk further attacks on their own assets in the short-term if it can produce longer-term security.

To that end, the Saudi’s East-West pipeline was reportedly attacked again on Sunday, with the Houthis quick to take credit, claiming successful strikes in the areas of Riyadh and Khurais. There’s been conflicting reporting regarding the extent of the damage, with initial reports that flows via the pipeline had been halted again, but both Bloomberg and Reuters are reporting this morning that oil is still flowing. This remains the top alternative route for the world’s traditional top crude oil exporter, keeping the conflict with the Houthis in focus. The decade-plus old conflict in Yemen has been one of back-and-forth lightning advances, with the recent Houthi gains no exception. With that said, it will be important to stay on top of the unfolding offensive this week, especially in the context of Bab al-Mandeb being one of Iran’s biggest remaining bargaining chips.

The improvement to crude oil flows via the Strait of Hormuz itself and other outlets appears to be calming the market’s response to these developments, however, with maritime tracking firm Kpler and other industry bodies reporting flows from the Middle East returning to pre-war levels (excluding Iranian shipments, that is). Iran continues to target shipping in the Strait of Hormuz, reportedly striking two more ships over the weekend after a handful of successful strikes last week, but crude continues to flow. This has largely been aided by the growing use of smaller shuttle tankers that move cargo through the most vulnerable portions of the Strait before conducting ship-to-ship transfers with larger vessels outside the highest-risk areas. These movements have been supported by an expanded U.S. naval presence and military escorts, allowing crude flows to rebound even as direct tanker attacks and maritime security incidents persist. While the arrangement is less efficient and more costly than pre-conflict trade patterns, it has demonstrated that significant volumes of crude can still reach global markets, helping explain why oil supply disruptions have been more limited than many initially feared. With that said, it’s worth noting that most of the improvement to shipping thus far has been centered on crude oil itself, not refined products—this is where the true stress remains.

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Perspective: Morning Commentary for October 5

October 5 – It’s a relatively light week of economic data, so geopolitics will likely remain in focus. Stock futures are pointing to a quietly mixed open to kick off the week as they await the next headline, with the VIX rebounding from Friday’s drop to hang in the middle of last week’s range, sitting just above 16.1 at the time of writing. The dollar has carved out another 18-month high, pushing above 102.5 overnight and remaining up ~0.3% on the day to trade near 102.25 at present. Treasury yields are modestly higher to start the day, with 2-year yields trading at 4.835%, 10-year yields at 5.305%, and 30-year yields at 5.66%. Crude oil prices are modestly lower this morning, with nearby WTI down roughly 2% to trade near $89.40 but Brent down a much more modest 0.1% to trade near $102.10. The ags are mostly higher to start the day, looking to claw back some of last week’s sharp losses.

Mike Castle
Mike Castle
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Perspective: Mid-Day Commentary for October 2

October 2 – The Nasdaq surged to another fresh all-time high this morning and remains up roughly 1% on the day at the time of writing, while the S&P 500 is up 0.65%, and the Dow Jones is up 0.3% as equities breathe a sigh of relief on falling rate expectations. The VIX has bounced from its morning lows but remains notably lower, hovering near 15.8 at midday. The dollar remains in the red as well, albeit still notably elevated after breaking above 102 for the first time since April 2025 yesterday, trading near 101.88 at present. Interestingly, Treasury yields have risen through the session to now sit higher on the day, with 2-year yields at 4.806%, 10-year yields at 5.252%, and 30-year yields at 5.613%. Crude oil prices remain notably lower but also off the morning lows, with nearby WTI down 3.1% to trade near $90 and nearby Brent down 1.6% to trade just below $100.70. The ags remain quietly mixed, mostly in the red at the time of writing.

Mike Castle
Mike Castle
  • Grains & Oilseeds

Perspective: Morning Commentary for October 2

October 2 – The bad news is good news trade is back in full effect, with stock futures surging to point to a notably stronger open following a significantly worse than expected tranche of U.S. labor market data in this morning’s September Nonfarm Payrolls report which we’ll dive into in more depth below. The VIX has broken sharply lower in response, now hovering around 15.5, its lowest level since last Friday. The dollar is following suit as this softens Fed rate expectations, now down 0.2% on the day to trade near 101.86 at the time of writing. Treasury yields are joining in on the drop as well, with the 2-year at 4.74%, 10-year at 5.184%, and 30-year at 5.57%. Crude oil is notably lower to start the day, with nearby WTI down 3.9% to trade near $89.30 and nearby Brent down 3.1% to trade near $99.10. Meanwhile, the ags are largely mixed to start the session, with parts of the wheat complex narrowly in the green at the break while corn and soybeans hang in the red.

Mike Castle
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