Perspective: Morning Commentary November 7

By: Arlan Suderman, Chief Commodities Economist

Fri, 07 Nov 2025, 14:31

Today's Perspective Video: China Cuts Tariffs

November 7 – It’s day #38 of the partial government shutdown, and Wall Street is bemoaning the fact that we will not see the government’s monthly jobs report for October today. Meanwhile, the correction lower continued in the equities overnight, with stock futures again posting modest losses, while the VIX traded to a two-week high near 21. The dollar index is trading near 99.5 this morning. Yields on 10-year Treasuries are trading near 4.11%, while yields on 2-year Treasuries are trading near 3.58%. Crude oil prices bounced modestly off yesterday’s two-week lows, while the grain and oilseed sector traded mixed to firmer, with soybeans posting modest strength.

Rare earth minerals and magnets continue to be the biggest hotspot in the tensions between China and the United States. These products are essential components for much of today’s high tech manufacturing economy, and they are even more essential for the production of today’s advanced defense weapons. Give China credit for having the foresight to understand that more than 30 years ago when it began implementing a strategy to achieve a monopoly on the mining and processing of rare earth minerals. The rest of the world, including the United States, was asleep at the wheel as China began implementing the strategy. It achieved a 90% monopoly on processed rare earth minerals, allowing it to now choose winners and losers in the world in both the area of manufacturing and in who can build advanced defense weapons. The world must now decide whether it is comfortable with China serving in that role of choosing winners and losers in the world in regard to who will have a strong manufacturing sector and who will hold the most advanced defense weapons. You’ll rarely hear world leaders speak of the importance of rare earth minerals for the production of defense weapons, because they don’t want to reveal vulnerabilities to their national security. But this remains a significant national security issue for America, and for much of the West.

President Trump recognized this dilemma earlier this year, making it a priority in trade negotiations with China after it cut off exports of many rare earth minerals and magnets, even as he started the cumbersome process of developing our own sources. That may take several years to develop. China further tightened the noose on us in early October when it cut off shipments of most remaining processed rare earth minerals – not only to the United States, but to much of the rest of the world as well. That produced a threat from President Trump to add another 100% tariff on Chinese goods on November 1 if China failed to roll back its restrictions. China agreed to suspend export restrictions for one year in the late October agreement on the condition that the United States would not proceed with its additional 100% tariffs. Other factors were quickly added to the trade agreement, such as Chinese purchases of soybeans and other Ag and energy commodities. That agreement has still not been signed, as negotiators continue to work out the details.

China’s method of adherence to the agreement has been to introduce general licenses for receiving rare earth minerals and magnets from it. This license process then becomes China’s de facto export control. Some sources suggest that the development of this license process could take months to develop, allowing China to look like it’s complying, when it essentially is not. We can get a sense for what this licensing process will require when we look at what China has been already requiring over much of the past year. Receiving rare earth minerals and magnets is expected to require the buyer to provide detailed documentation of how the products will be implemented into the production process, including pictures of the manufacturing process. This process risks proprietary information being stolen by the Chinese. Licenses are expected to be extremely difficult to receive for companies involved in the production of defense equipment. Reuters reports that European Union firms submitted some 2,000 applications since April, and just over half have been approved six months later, but with strict adherence requirements. Considering the sensitivity of rare earth minerals and magnets for economic and security reasons, this is the area where we are most vulnerable to China failing to comply with the agreement, and with President Trump responding with another rapid escalation of tariff threats that could unravel the yet unsigned agreement.

Confirmed purchases of U.S. Ag commodities by China thus far appear to be two cargoes of U.S. wheat – the first such purchases in more than a year, and a cargo of grain sorghum, in addition to a handful of cargoes of soybeans believed to have been purchased by state buyer Sinograin. While encouraging, yesterday’s selloff reflected disappointment that we haven’t seen a more concerted effort by China to live up to the agreement, including its general silence on the details of the agreement. China imported 9.48 million metric tons (348 million bushels) of soybeans in October, primarily from Brazil. May to October soybean imports from Brazil were nearly 10 mmt larger than the previous year, providing a buffer against needing to import U.S. soybeans, as China takes advantage of Brazil’s expanded production capacity that provides lower cost soybeans to it.

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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Perspective: Morning Commentary for August 3

August 3 – Equities futures are pointing higher to open the week and month, still in range of recent record highs and flush with optimism that the U.S. and others will start to negotiate with Iran over the Strait of Hormuz. A busy week is on tap with earnings reports and jobs data, among other economic releases. Crude oil is down over $5 per barrel and nearing in on three-week lows. The dollar is only slightly lower this morning but at its own month-and-a half low, while the U.S. ten-year note is also slightly on the low side at 4.68. The VIX index is rebounding a bit today after a sharp slide into the end of last week, just above 16.

Matt ZellerMon, 03 Aug 2026, 12:45

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Perspective: Mid-Day Commentary for July 31

July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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