Perspective: Morning Commentary for October 6

By: Arlan Suderman, Chief Commodities Economist

Thu, 06 Oct 2022, 12:45

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

October 6 – The euphoria on Wall Street to start the month has already started to erode as fear creeps into traders minds once again. The fear was never really gone, as the VIX remained elevated amid the early week buying, but it’s moving to the front of traders’ minds once again. This morning’s headlines spoke of recession fears being tied to central banks tightening money policy, and that they have no choice because of the track of the Federal Reserve. Don’t you love it when journalists think that they are economists? The headlines also suggested that inflation is only a matter of energy prices and lingering supply chain issues. Again, not understanding how economics function. But those headlines are reflective of the thinking of Wall Street as well. Stock futures came under modest pressure overnight, with the VIX trading back near 29. The dollar index firmed to trade near 111.4. Yields on 10-year Treasuries are trading near 3.75%, while yields on 2-year Treasuries are trading near 4.15%. Crude oil prices are modestly lower following this week’s sharp gains, while the grain and oilseeds pulled back as well in a modest “risk-off” mode for many of the assets trading overnight.

First time claims for unemployment benefits rose to 219K in the week ending October 1, up from a very low 190K the previous week, and up from analyst expectations of 203K. Continuing claims for the week ending September 24 rose 15K to 1.361 million. This is the number we need to keep an eye on for signs of an easing jobs market. It’s still a low number, albeit with this week’s total starting to edge higher.

OPEC+ approved a 2-million barrel per day cut in output on Wednesday. The question is, where will it leave supplies down the road. OPEC+ members already fell 3+ million barrels per day below their quotas last month, as they struggle to meet the goals. The cartel will need to increase output by 1.2 million barrels per day just to get up to the new quotas reached this week, even though those quotas fell by 2 mbpd. Even so, crude oil prices rallied more than 10% this week off last month’s lows in anticipation of the move by OPEC+, and in response to it. That’s what cartel members care most about, but they also want to be flexible enough to respond to potential policy changes in China later this month that could reopen its economy. Risks continue to exist that we could see tighter energy supplies in 2023, although the market’s response to that possibility has been muted by fears of a broader global recession that continues to cut consumption.

Add North Korea back to the list of geopolitical risks. The rogue government flew a missile over Japan, and it’s longest distance to date, on Tuesday. That elicited a response from both South Korea and the United States on Wednesday, when the two conducted rare missile tests in the region, even as the U.S. positioned a supercarrier just east of North Korea to send a message. The aircraft carrier Ronald Regan made port in South Korea last month for the first time in years. It will now position itself between Korea and Japan. Both U.S. and South Korean troops fired a volley of missiles into the sea on Wednesday in response to North Korea’s actions, while a meeting of the U.S. Security Council was also called. Both Russia and China jumped to North Korea’s defense in the meeting.

The tentative rail agreement brokered by the Biden Administration continues to work its way through the rank and file of the unions involved. Many union members are not happy with the agreement, but it’s yet to be determined whether a majority of each union involved will ratify it. Failure of all of the 12 unions to ratify would result in the status quo continuing longer and could result in a work stoppage. That’s right. We still could end up with a rail strike. The last of the unions should complete the process by mid-November, so it will be a while before we know whether the issue is resolved. Regardless, freight costs are going up. The agreement includes a 24% pay raise scaled in over time, along with changes in worker rules that may reduce rail capacity due to worker shortages. Of course, an actual rail strike would be even more inflationary, while also disrupting significant supply chains. Corn is the number one commodity moved by rail at more than 691K cars in 2020. That’s followed by grain mill products at 388K cars, and by ethanol at 383K cars. Soybeans, wheat, and soybean products are right behind those totals.

Ukraine’s winter grain acreage may fall by as much as 50% according to a private grain company in Ukraine, although the government still says we may see “just” a 20% decline. Regardless, the grain and oilseed markets were weaker overnight, reflecting heightened fear that global recessionary problems may erode demand for food- and energy-based commodities in the months ahead. It’s still a headline driven market.

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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

Grains & Oilseeds

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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