Perspective: Morning Commentary September 5

By: Arlan Suderman, Chief Commodities Economist

Fri, 05 Sep 2025, 14:06

September 5 – Bad news is good news again today, as another poor jobs report provided optimism on the Street that we will see a rate cut later this month from the Federal Reserve, with more cuts likely as we head toward the end of the year. The VIX is trading below 15 following the release of this morning’s jobs report, while the dollar index follows Treasury yields lower to trade near 97.5. Yields on 10-year Treasuries are trading near 4.08%, after falling to fresh five-month lows, while yields on 2-year Treasuries are trading at fresh five-month lows as well near 3.48%. Crude oil prices are 2% lower on fears that OPEC+ will again increase production quotas this weekend, while the grain and oilseed sector had a mixed to firmer tone to it.

The economy created just 22K jobs in August, down from expectations of a mere 77K jobs. The July number was revised upward by 6K to 79K jobs created, while June was revised down by 27K to -13K jobs created. In other words, the revisions now show that we lost jobs in June. The labor participation rate ticked higher to 62.3%, which is a move in the right direction, but that also caused the unemployment rate to tick higher to 4.3%. Unemployment has rarely been this low over the past 50 years, but it is the highest rate since the July 2024 report. The unemployment rate has been between 4.0% and 4.3% over the past 13 months. Private payrolls gained 38K jobs in August, while government jobs lost ground again. Specifically, the Federal government payroll shrank by another 15K workers, putting its payroll down by 97K since it peaked in January. Note that workers on severance pay are still considered employed, but many of those packages are set to expire once we move into the new fiscal year in October. Average hourly earnings continued to grow at a 0.3% monthly pace, as expected, although the year-on-year pace slipped lower to 3.7%, indicating easing wage inflation pressures. The average workweek was unchanged at 34.2 hours.

Fed fund futures are trading a near certainty of a Federal Reserve rate cut this morning. In fact, The CME Fed Watch tool gives 12% odds that we’ll see a 50-basis point rate cut at the September 17 meeting, with nearly 65% odds that we’ll be down by 75 basis points by the December meeting. Rate cut euphoria is back in vogue on Wall Street. I put a chart in my midday commentary yesterday showing that M2 money supply rose to a record $22.1 trillion in August. That’s a tremendous amount of spending potential if / when we see “uncertainty” removed from the economy. The “Big Beautiful Bill” that was passed this summer had a number of incentives within it for business expansion, and data shows that businesses have expansion plans in place. However, they’re holding off on those expansion plans due to the “uncertainty” currently in the economy primarily revolving around President Trump’s tariff war. Consumer surveys tend to say that consumers feel okay about things now, but they’re holding off on major purchases due to worries about the future as a result of the “uncertainty” that is currently in the economy due to the tariff war. Housing prices continue to work higher due to a shortage of housing in this country, because sellers believe that demand will surge if / when the “uncertainty” is removed, even at current interest rates – which are coming down, by the way. That leaves the Fed facing a dilemma. What if they cut rates notably, creating stimulus at a time when M2 money supply is record large, and then “uncertainty” is removed from the economy, either by President Trump, Congress, the courts, or something else. We could suddenly see a surge in economic growth – and possibly inflationary pressures return. That’s a big “IF” the Fed has to wrestle with.

StoneX released its September customer survey on Thursday afternoon, pegging the corn crop at a yield of 186.9 bushels per acre, down from 181.1 bpa in August. Its soybean yield fell slightly to 53.2 bpa, down from 53.6 bpa in August. These estimates slipped lower during the month of August, which was not kind to the crops. The eastern Midwest saw one of the drier Augusts on record, which I’ll detail in my webinar next week, but that was partially offset by one of the cooler periods that we’ve seen for August. Overnight temperatures were quite warm in July, but they cooled considerably in August, which helped to offset the dryness issues to some extent. Disease problems continued to mount – particularly in the western Midwest. Again, this fits the pattern of most years when we see an increase in the size of the crop in August – the final crop tends to be smaller than that August estimate. How much smaller is still the subject of debate, which will be determined when the combines roll, and we see the impact of the above-mentioned problems on seed size. Changes in seed size are difficult to detect in visual examinations, but they can have a significant impact on yield. All of that is meant to say that we’ll have a better idea of the crop size a month from now, and an even better idea two months from now. StoneX will continue to survey our customers over the next couple of months to provide the best information available. Regardless, the crops are still large, and China isn’t buying, which means that storage is our next problem. Those storage issues will be most pronounced in the northwestern Midwest, where record crops are expected, but the rail to Pacific Northwest ports has little demand to fill. That will show up in the basis market, with implications to the south and east as well.

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Perspective: Morning Commentary for August 5

August 5 – U.S. equities markets are on fire this week, with both the Dow Jones and S&P 500 setting new all-time highs yesterday with futures indicating further gains again today; the marketplace remains optimistic over a deal with Iran despite no evidence of such as of yet. Crude oil is working on a lower high and low today but remains slightly on the high side on the session, while the dollar is retreating back towards Monday’s nearly two-month low. The ten-year note is steady-to-lower this morning (though solidly lower so far this month) at 4.605%, while the VIX index continues to rebound into mid-week at almost a 17-point reading this morning.

Matt ZellerWed, 05 Aug 2026, 12:39

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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: Mid-Day Commentary for August 3

August 3 – The Dow Jones is up over 500 points as of the time of this writing, right in the range of the record high close just under a month ago; the marketplace at least appreciates the rhetoric from Trump calling for negotiations, and WTI crude oil dropping by around $5/bbl. The S&P and NASDAQ are also up 1% or better on the session, while treasury yields suffer chop lower on the day, with the ten-year note down slightly at 4.69% at this time.

Mike CastleMon, 03 Aug 2026, 15:10

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