Perspective: Morning Commentary for September 20

By: Arlan Suderman, Chief Commodities Economist

Tue, 20 Sep 2022, 13:26

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

September 20 – Stock futures were on the defensive overnight, as the Federal Open Market Committee prepares to begin two days of meetings to consider possible adjustments to its monetary policy. The VIX is trading near 27 this morning, reflecting an elevated level of concern on Wall Street. The dollar index is also firmer, trading near 110.1 currently. Yields on 10-year Treasuries surged to trade to a 22-year high 3.58%, while yields on 2-year yields trade to a new 14-year high of 3.99%. Yet, we did see some positive money flow into the broader commodity sector overnight, with crude oil prices modestly higher, while the grain and oilseed markets were mixed to higher.

U.S. housing starts rose to an annualized rate of 1.575 million in August, up from 1.404 million in July, and well above analyst expectations that they would come in at 1.440 million. However, permits for new homes slipped to an annualized rate of 1.517 million, down from 1.685 million the previous month, and well below the 1.621 million expected by analysts. The number of new starts was surprising to the upside, but the dip in permits fits with yesterday’s decline in the housing market index. The HMI is an index created to measure the health of the housing industry. It showed the index declining for the ninth consecutive month in September to 46, which is its lowest level since the pandemic. In fact, this month’s HMI is the lowest in more than eight years when you take out the aberration of the pandemic. The single-family HMI fell to 54 this month, down from 57 the previous month, and down from 82 the previous year. The six-month out index for single-family dwellings fell to 46 this month, down from 47 in August, and down from 81 a year ago. But most concerning, the index for traffic of prospective buyers fell to 31 this month, down from 32 the previous month and down from 61 the previous year. Prospective buyers are concerned about rising interest rates, the uncertainty of the economy, and supply chain and labor issues that could make completion of a home more challenging.

The Federal Reserve will certainly take note of this dramatic slowdown in the housing sector, but it appears determined to “fix” the inflation problem that it helped to create. It now seems to understand the risks that long-term inflation present to the economy, and it is determined to fix the problem. I applaud policymakers for that. However, there is not precedent for the decisions that they have to make. They need to be aggressive in tackling inflation, but not be so aggressive that they throw the economy into a deep recession, or even a depression. As such, Wall Street is rightfully nervous about the current trajectory. Fortunately, the overall economy shows signs of still being solid, although it will take months before we fully feel the effect of the Fed reducing the balance sheet. Nonetheless, the market is braced for a 75-basis point rate hike tomorrow, followed by a similar move in November.

Argentina’s “pesos for dollars” program created to encourage farmers to sell soybeans came to an end today – not officially, but from a practical standpoint. The program contributed to more than 5.5 million metric tons of soybeans being sold on the spot market thus far this month, with another 2.3 mmt fixed for deferred delivery. The program offered farmers selling soybeans 200 pesos for every dollar’s worth of soybeans sold. The official exchange rate is near 145 pesos to the dollar. Farmers quickly took advantage of the program, dumping soybeans onto the market, while providing much-needed dollars to the government for rebuilding its foreign exchange reserves that it needs for making debt payments. However, farmers quickly figured out that they could turn around then and rebuy dollars with those pesos, making an additional profit. However, that also drained foreign exchange reserves once again. As such, today Argentina ruled that “companies” could no longer repurchase dollars, and most farmers operate as a company in Argentina. This essentially killed the program. China had been aggressively taking advantage of the program to snatch up “cheap” soybeans, reducing its need to purchase as many U.S. supplies.

USDA’s weekly crop progress report showed continued deterioration of the nation’s corn and soybean crops over the past week, in data released Monday afternoon. That dropped by corn yield model to 169.6 bushels per acre, down 1.2 bushels over the past week. My soybean yield model fell 0.2 bushel to 51.8 bushels per acre. The latter feels high to this former agronomist, but I don’t have the data to argue otherwise at this point. StoneX’s next updated customer survey that produces our official yield estimates will be released on October 4. Yield reports thus far have been all over the place, depending on rains over the past 45 days, but it’s still quite early in the harvest period. The current weather pattern should favor a rapid dry-down, facilitating active harvest progress over the next 10 days. The corn balance sheet is most concerning, with another big soybean harvest likely in Brazil in four months.

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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: Morning Commentary for August 6

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Mike CastleThu, 06 Aug 2026, 13:24

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Perspective: Mid-Day Commentary for August 5

August 5 – The Dow Jones is ripping higher for yet another session, up safely over 500 points at the time of this writing to carve out another record high; the S&P and NASDAQ are a bit less enthusiastic but the former is still making its own record high, while the latter is less than 500 points off its own top thanks to a strong ongoing week of trade. The dollar is churning lower this morning in an effort to re-test Monday’s 1 ½-month low, while the ten-year note has flipped higher in the mid-morning hours. The CME FedWatch tool interesting has market odds of a quarter-point rate hike next month coming closer to a 50-50 proposition as crude oil prices decline.

Mike CastleWed, 05 Aug 2026, 15:19

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