Perspective: Morning Commentary for August 10

By: Arlan Suderman, Chief Commodities Economist

Wed, 10 Aug 2022, 13:28

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 10 – Inflation is expected to top the discussion list on Wall Street today, following the release of the July consumer price index, with the July producer price index scheduled for release tomorrow. The VIX fell to a fresh three-month low below 21 on the data release this morning as stocks rallied, with the dollar index falling sharply to a five-week low below 105.0. Yields on 10-year Treasuries fell to 2.67%, before rallying to 2.75%, with the yields on 2-year Treasuries at 3.13%. Crude oil prices are mixed, while the grain and oilseed markets pressed higher on weather concerns and rising export demand related to those weather concerns.

The headline CPI number was flat month-on-month in July, which is a dramatic change from the 1.3% gains seen in June. Analysts expected 0.2% gains. The CPI rose 8.5% year-on-year in July, down from 9.1% in June and below analyst expectations of 8.7%. The core CPI that excludes the more volatile food and energy sectors rose 0.3% month-on-month in July, down from 0.7% in June and down from analyst expectations of 0.5%. The core CPI rose 5.9% year-on-year in July, matching the June pace, but down from analyst expectations of 6.1%.

Food inflation was up 1.1% month-on-month in July, while up 10.9% year-on-year. This was the 7^th consecutive month that saw food prices rise 0.9% or more on a monthly basis. Food for consumption at home was up 1.3% month-on-month and up 13.1% year-on-year. Food for consumption away from home was up 0.7% month-on-month and up 7.6% year-on-year. Energy prices were down 4.6% month-on-month in July, while gasoline was down 7.7%, fuel oil down 11.0%, natural gas down 3.6%, while electricity was up 1.6% month-on-month. We all remember how many food and energy commodities tumbled in July, although that didn’t translate into cheaper food prices at the retail level. Overall, energy prices are still up 32.9% year-on-year, with gasoline up 44.0%, fuel oil up 75.6%, natural gas up 30.5% and electricity up 15.2% year-on-year. Commodity prices ebb and flow, but many of the structural problems creating inflationary pressures, in addition to the wage inflation discussed yesterday, remain in place. New vehicles were up 0.6% month-on-month and 10.4% year-on-year. Used cars were down 0.4% month-on-month, but up 6.6% year-on-year. Clothing fell 0.1% on the month but was up 5.1% on the year. Shelter prices rose 0.5% on the month and are up 5.7% on the year. Medical services are up 0.4% month-on-month, and up 5.1% year-on-year.

Today’s report was a good one, relatively speaking. It showed the anticipated moderation in inflation numbers, largely due to the big drop in commodity prices in July. This will heighten the talk of peak inflation. I hope that’s true, but I fear that we are far from solving the inflation problem. Energy prices plummeted in July largely because of China’s economic slowdown due to Covid restrictions, and due to fund fears of declining demand due to an impending recession here in the States. Grain and oilseed prices fell sharply largely due to this same fund manager recession fear, combined with a belief that U.S. 2022 crops would be in good shape. That sentiment is currently changing. The dollar index plummeted on the data’s release, while Treasury yields fell sharply as well. Trade sentiment reflected attitudes that inflation is now behind us, and that the Federal Reserve can reverse its hawkish positions. What scares me most is the fact that the Fed has repeatedly stated that it looked at people’s inflation expectations for making their decisions. These so-called “experts” are making monetary policy based on public perceptions of inflation. The public may perceive inflation is behind us because of a sharp downward correction in commodity prices, while the structural issues causing inflation are still in place, leading to poor policy decisions that end up costing us more down the road. I hope that the Fed understands that.

Grain and oilseed prices rallied again overnight on fears that this month’s weather is taking the top off the corn, soybean, and spring wheat crops. I still don’t see the conviction of the funds in this rally, so I’m still a bit skeptical on the scope of the current rally, even though I see the balance sheets tightening up later this fall when the combines give us better data on the crops. Additional support should come today from USDA’s flash sales announcement of another 7.2 million bushels of U.S. new-crop soybeans sold to China. The headlines are already moving past the Chinese military exercises offshore from Taiwan, even though that remains a significant longer-term threat. It didn’t take long for the market to get headline fatigue from the conflict. For now, the focus is on U.S. weather and its impact on the crops, as reflected in the weekly crop ratings. The two-week outlook moderated somewhat over the past 24 hours, but it still reflects a general warm pattern west of the Mississippi River, with rainfall below normal. We’ll see a possibility of shower nearly everywhere in the Midwest over the next two weeks, but the pattern is currently very disorganized in the forecast, with showers scattered hit-and-miss events. The threats remain greater for Europe’s corn crop, and we could see USDA trim some off China’s corn crop as well, although the August report may be a bit early for the agency to act on either one. The Pro Farmer Midwest Crop Tour may prove to be a significant event this year for the markets to get an idea of what’s going on in the Midwest – great in the east, not so in the west.

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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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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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