July 28 - Wall Street celebrated this morning's inflation data by adding to the current bull move in the stock market, with the tech sector continuing to lead gains. The VIX is trading below 14 again today, reflecting the calm on Wall Street. The dollar index is trading lower near 101.5 at midday, in what has been an active trading session. Yields on 10-year Treasuries are trading near 3.96%, after trading above 4.04% earlier in the session, while yields on 2-year Treasuries are trading near 4.89%. Crude oil prices are consolidating lower inside Thursday's trading range that posted a fresh three-month high, while the grain and oilseed markets are mostly lower going into the weekend.
The path of least resistance is lower for the grain and oilseed sector today. News out of Ukraine is relatively quiet today, although the situation on the ground is far from calm. But for now, the bulls lack fresh fodder to fuel buying. Weather forecasts show improving weather for the Ag Belt going forward, which should be beneficial for this year's corn and soybean crops as well. That's not to discount problems that may have been created by this week's heat and dryness, but this is a futures market. Private production estimates will come out starting next week, which should provide better market direction heading into USDA's August WASDE crop report. Corn and wheat export demand remains weak. New-crop soybean sales have increased dramatically, with nearly 66 million bushels of flash sales announced just this week. But that still leaves them several hundred million bushels below where we'd normally expect them to be this time of year. Nonetheless, it's a move in the right direction.
Temperatures are in the 60s°F in North Dakota at this hour as mild air begins to work its way to the south and to the east into the Midwest this weekend. High temperatures are still expected to top 100°F today across much of Kansas, Missouri, southern Illinois, and adjoining areas of Nebraska and Iowa, with a brief return of intense heat to the southwestern Midwest early next week. But the shift toward a milder weather pattern has begun, with August expected to see overall temperatures average below normal across much of the Midwest. The weather pattern is expected to become more active as well with storms crossing the Midwest as we move into August. That transition can be seen in the week #2 outlooks from three popular forecast services below. They vary in the details, but all three show a more active Midwest rainfall pattern, with possible drier risks near the Great Lakes where they've been getting rain this week.
Consumer sentiment rose to 71.6 this month, up from 64.4 in June and up from 51.5 a year ago. Today's final July number was slightly below the mid-month projection of 72.6. The current conditions index rose to 76.6 this month, up from 69.0 last month, and up from 58.1 the previous month. The index of consumer expectations that gives a better reading of where consumers think we're heading rose to 68.3 this month, up from 61.5 in June, and up from 47.3 a year ago. An 18% surge in long-term business conditions and a 14% rise in short-run business conditions provided the greatest momentum for this month's increase. The survey revealed improving sentiment as headline inflation numbers trend lower and the labor markets stabilize. Ironically, lower-income survey participants recorded a declining sentiment amid expectations that inflation and their income prospects will worsen in the year ahead. Year-ahead inflation expectations among all those filling out the survey actually ticked higher to 3.4% in July. That's well below the 5.4% high water mark posted in the survey in April 2022, but it's still above the 2.3 - 3.0% range seen in the two years prior to the pandemic. The consumer sentiment survey is conducted by the University of Michigan.
