Perspective: Morning Commentary for April 29

By: Arlan Suderman, Chief Commodities Economist

Fri, 29 Apr 2022, 13:28

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

April 29 – Stock futures pulled back overnight from Thursday’s solid gains as traders position for the weekend ahead in a world of uncertainty. Inflation remains red-hot, the Fed is expected to take big steps toward taming it next week, the war intensifies in Ukraine and much of China remains in lockdown due to Covid. The VIX continues to trade near 30, reflecting heightened worry levels on Wall Street. The dollar index pulled back from Thursday’s 19-year highs to trade near 103.2, while yields on 10-year Treasuries trade near 2.91%. Crude oil prices are roughly 1% higher this morning, while the Ags are quietly mixed.

Personal income rose 0.5% month-on-month in March, beating analyst expectations of a 0.4% increase. Furthermore, the February data was revised to 0.7% growth in personal income, up from the 0.5% originally reported. Personal consumption expenditures grew by 1.1% month-on-month in March, beating analyst expectations of 0.6% growth. February’s number was also revised to 0.6% growth, up from the 0.2% growth originally reported. The PCE price index rose 0.9% month-on-month in March, matching analyst expectations, and up from a 0.5% rise the previous month. The PCE price index was up 6.6% year-on-year in March, which fell short of analyst expectations of a 6.8% rise, although it was still up from 6.3% the previous month. Now for the number that the Federal Reserve monitors for its indication of inflation. The core PCE price index that excludes the more volatile food and energy sectors rose 0.3% month-on-month in March, matching analyst expectations and matching the previous month’s growth. The core PCE price index was up 5.2% year-on-year in March, down from analyst expectations of 5.3%, and below the 5.3% seen the previous month.

The optimist will see this as an indication that inflation is topping, and that may be the case, although I do not think that we’ve seen enough evidence yet to have any kind of confidence in that assumption. Too many risks remain that we could see higher inflation levels, let alone sustained inflation levels at these levels with some fluctuation from month to month. Taming inflation typically requires taking interest rates to the level of inflation, or a bit higher. Assuming that the PCE data, which is lower than some of the other indicators, is what you want to use for inflation, than that would mean that the Fed needs to take its benchmark rate to at least 5%, and possibly a bit higher. I do not think that has been priced into the market, and such a move would also blow up the federal budget, which would be consumed by interest payment obligations on the nation’s $30+ trillion in debt.

Inflation is created when demand for goods and services exceeds the supply of such. Fiscal and monetary stimulus increased demand above levels that were sustainable by supply chains in normal times, let alone supply chains challenged by Covid. Interest rates are increased, and stimulus withdrawn (shrinking the Fed’s balance sheet) to slow demand to bringing it back into line with supply. That doesn’t happen overnight, and it doesn’t happen without some pain. Demand is pent up right now, especially with trillions in stimulus still in the system. Millions of Americans want to buy a new car, but they cannot do so right now due to a shortage in the supply of cars. Their existing car is aging, and they’re waiting for the opportunity. The same can be said for houses, as well as other items, while many also want to take a vacation trip after the two-year pandemic. Convincing them not to buy a car or new house or take a trip when they need one requires some pain points that we have not yet seen. That typically requires seeing higher unemployment levels than what we currently see, which means more pain for the economy as well. The employment market is so tight right now that wages are soaring, providing more money to feed the demand side of the above equation. This morning’s data revealed that the employment cost index rose 1.4% quarter-over-quarter in the first quarter, up from 1.0% growth in the previous quarter and above analyst expectations of 1.1% growth. The index was up 4.5% year-on-year, above analyst expectations of 4.3% and up from 4.0% the previous quarter. The fear is that the Fed will over-react and create too many pain points that pull us into a recession. After all, how many things has it got right over the past year or two?

Ukraine exported its first Panamax of 2.8 million bushels of corn through a Romanian port. That’s good, but it took two months to do so, and this is a small fraction of the demand. A similar amount of grain is at the port waiting to be loaded, while a like amount is currently on its way to the Romanian port from Ukraine. There are more than 30K rail cars backed up at Ukraine’s western border waiting for transfer to Poland’s rail system for movement to Romania and Moldova, up from roughly 23,195 on April 4^th. The number of grain cars rose from 1,988 on April 4 to 5,185 currently. The current average wait for a rail car is 20 days. The bottom line is that supplies out of Ukraine will flow, but at relatively low levels compared to the pre-war flow for quite some time. Meanwhile, grain and oilseed traders continue to climb the wall of worry regarding supply and demand fundamentals, albeit with signs of consolidation as we prepare to close out the week and the trading month. End-of-the-month trade often leads to some erratic movement, which the Algos may get ahold of to add to the volatility at some point today.

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Perspective: Morning Commentary for August 7

August 7 – The U.S. economy unexpectedly lost 23k jobs in July, dramatically below market expectations of an 80k increase and marking the worst Non-Farm Payrolls print since February. Furthermore, May and June were both revised sharply downward, with combined revisions showing 103k fewer jobs than previously reported. Outside of the healthcare sector, which added 22k jobs in July, the losses were very broad-based. Government payrolls saw the largest decline, shedding 53k jobs in July, the largest seen since October 2025, while June was revised down to show a loss of 10k jobs as well. The private sector at least saw growth, adding 30k jobs in July, now matching the month prior after it was revised down from the 49k initially reported, and substantially missing forecasts of 78k jobs being added. This is a sharp reversal in course from the largely better than expected U.S. labor data seen earlier this week.

Mike CastleFri, 07 Aug 2026, 13:26

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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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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