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Perspective: Mid-Day Commentary for July 31

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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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.

Chicago PMI beat expectations in July, rising to 57.6 from the 56.7 seen in June and coming in well above the average estimate of a decline to 56.0. This is the third consecutive month in expansionary territory for the index, and also marks six of seven months in 2026 showing expansion after holding in contractionary territory for 25 consecutive months previously. July’s increase was driven by the sharpest rise in new orders since January 2022, a very positive development, though some less rosy signs were also evident with employment remaining in contraction for the fifth straight month, reaching its lowest level since March. The other positive note was very modest changes in inflationary pressures, though respondents continued to express concerns regarding geopolitical tensions and rising energy costs having an impact moving forward.

U.S. consumer sentiment unexpectedly improved through July, with University of Michigan’s headline Consumer Sentiment Index rising to 55.2 in its final reading from the preliminary 54.4, going in the opposite direction of expectations that the resumption of fighting between the U.S. and Iran would weigh on sentiment and result in a drop to 54.0. It’s worth noting this is the best headline reading since February, prior to the war starting. The headline strength was driven by an increase in Consumer Expectations, rising to 55.4 from the preliminary 54.0 and also the strongest print seen since February. Current Conditions did fall, but ever so slightly, coming in at 54.8 from the preliminary 54.9, but again better than expected. Still, today’s data was certainly a welcome development to a market looking for confidence.

Consumer inflation expectations held steady from their preliminary July readings as well, with one-year expectations at 4.2% and five-year expectations at 3.3%. For context, this is a drop from the 4.6% one-year expectations and recent peak of 4.8% seen in May, but notably above the pre-war 3.4% seen in February. On the five-year side, July’s 3.3% is steady versus June, notably below the 3.9% seen in May, and only slightly above the 3.2% seen at the end of 2025. The real question now is what kind of uptick we see in the July inflation data amid the rebound in energy prices. This will kick off with July CPI being released on Wednesday, August 12th, followed by PPI the next day. Markets are pricing in a 25-basis point hike at the Fed’s September meeting, but they will see plenty of fresh data between now and then.

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Perspective: Mid-Day Commentary for July 31

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