Perspective: Morning Commentary February 12

By: Arlan Suderman, Chief Commodities Economist

Thu, 12 Feb 2026, 14:38

February 12 – A sense of optimism can be felt across the Street as we prepare to open this morning. Weekly jobless claims slipped lower, adding to the optimism of Wednesday’s monthly job report, and Treasury yields are slipping lower. Next up will be tomorrow’s critical inflation data ahead of a three-day holiday weekend. The markets will be closed on Monday for President’s Day. The VIX is trading near 17 this morning, while the dollar index trades near 96.8. Yields on 10-year Treasuries are trading near 4.16%, while yields on 2-year Treasuries are trading near 3.51%. Crude oil prices are pulling back a bit this morning, while the grain and oilseed markets are mostly higher, led by soybean prices that posted new highs for the move overnight.

First-time claims for unemployment benefits fell to 227K in the week ending February 7, down from 232K the previous week, but above analyst expectations that they would fall to 215K during the week. The four-week moving average rose to 219.5K claims, up from 212.5K the previous week. Continuing Claims for the week ending January 31 rose to 1.862 million, up 21K from the previous week. The four-week moving average for continuing claims dropped by 3,250 to 1.847 million, which was its lowest level since October 5, 2024. First-time claims for unemployment benefits filed by former Federal civilian workers totaled 615 in the week ending January 31, up by 47 from the previous week. Continuing claims for benefits filed by former Federal civilian workers in the week ending January 24 totaled 13,025, up 460 from the previous week. This is consistent with the drop in Federal workers seen in the January jobs report released on Wednesday.

China’s annual Lunar New Year Holiday starts this weekend, extending through February 23. It’s difficult for us in the States to comprehend the significance of this holiday in the Chinese culture. It’s a time when people travel back home to be with family or take extended holiday trips for leisure. As such, productivity drops, but spending tends to increase. This extended holiday is a key part of the Chinese economic engine as people travel, eat in restaurants, go to movies, buy gifts for one another, etc. As such, it provides a critical measure of consumer sentiment. Will they spend money on big ticket items, or will they be more restrained in their spending? Analysts will be watching their spending patterns closely. The results of the economic activity will no doubt be a part of the political equation within China as well, where President Xi Jinping continues to consolidate his power – removing the doubters and installing the loyal. That in turn impacts Xi’s approach to negotiations with the United States as well.

The South China Morning Post reported today that several unnamed sources familiar with the talks between China and the United States believe that we could see a one-year extension to the current handshake trade deal when President Trump travels to Beijing in April. Keep in mind that Xi will continue with his long game objectives of toppling the United States as the world’s largest economy and doing so by replacing the dollar with the yuan as the top global currency. That long game objective will not change. But his immediate problem is shoring up his support domestically within the Chinese Communist Party so that he can survive politically to get another term in office to continue his work on that objective. That means developing a working relationship with President Trump that eases some of the short-term pain on China. That’s the short game he’s currently focused on. And that gives President Trump a short-term edge to sell Ag & energy commodities to China, even when they may not make short-term economic sense to China. Xi is playing the short game to make sure he’s still in the game to win the long game.

Xi knows that President Trump’s agenda becomes sharply curtailed if he loses Congress in the midterm elections in November. As such, Trump wants to shore up his base with the sales. His policies to contain China contributed significantly to China’s economic problems that are creating challenges for Xi. Both leaders have something to gain in the short-term by a short-term deal that benefits them at home as they seek to cling to their power. That means that we could see a deal that moves commodities to China in exchange for easing policies that give some relief to China. It wouldn’t be about economics, but about politics. It would be short term, and not long term. The two countries are still moving toward a collision course long term, but both leaders might be willing to make significant concessions in the short term to help better position them for the long-term fight. The Ag and energy sector could benefit from such a deal in the short term, but it also needs to recognize the longer-term battle, moving toward less dependency on China. Brazil is at risk of being the loser in the Ag space in the near term if such a deal suddenly pushes its deal with China to the back shelf. The world has plenty of soybeans. The question is, will the political deal made in Beijing force the market to reshuffle those supplies because China makes purchase decisions that are no longer based on economics? Tomorrow I’ll discuss Russia’s role in this, where Putin is reportedly considering a return to supporting the dollar and cooperation with Trump, which could end the Ukraine war. It’s 3-D Chess!

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