Perspective: Morning Commentary for August 22

By: Arlan Suderman, Chief Commodities Economist

Mon, 22 Aug 2022, 13:04

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

August 22 – Global economic concerns are again on the front burner to start the week, after China’s central bank cut interest rates, highlighting problems there. Contrarily, Wall Street traders remain concerned about anticipated additional rate hikes here in the States from the Federal Reserve. The VIX is trading above 23 for the first time since August 3^rd as anxiety ratchets up on Wall Street, pushing money toward the safe-haven assets. The dollar index is trading at new five-week highs near 108.4. Yields on 10-year Treasuries are trading near 2.97%, while yields on 2-year Treasuries are trading near 3.28%. Crude oil prices are modestly weaker on the economic concerns. The Ags started lower overnight as well, but they firmed ahead of the morning pause in trading, led by corn and soybeans.

The annual Jackson Hole Economic Symposium, hosted by the Kansas City Federal Reserve District, is scheduled to take place Thursday to Saturday of this week. Wall Street will be monitoring speeches at the symposium closely for indications of any change in monetary policy direction, with the current thinking being that policymakers will reinforce their commitment to attacking inflation with hawkish monetary tightening – higher interest rates and shrinking the balance sheet. The approaching symposium will keep the headlines focused on the economy and on monetary policy, shaping sentiment on Wall Street this week.

The Kansas City Fed District tends to be one of the more hawkish / conservative central bank districts, but the speaker lineup for the symposium also tends to be highly academic in nature, which tends to push policy makers subtly closer to Modern Monetary Theory, which has been an utter failure to this point. MMT says that monetarily sovereign countries that spend, tax, and borrow in a fiat currency that they fully control are not operationally constrained by revenues when it comes to federal government spending, since they can print as much as they need. That’s been the general direction of the Fed since the Ben Bernanke error, which has largely contributed to the high inflation and economic malaise currently hampering the economy.

China faces a different challenge currently. Covid cases hit three-month highs last week, resulting in more restrictions and localized lockdowns. Case numbers came off those highs over the weekend, but still remain high for a country with a zero-tolerance policy. China reported 360 locally transmitted Covid-19 cases on Sunday, along with 1,464 asymptomatic carriers. More than 20 colleges and universities postponed the start of the new semester to help slow the spread of Covid. China cut its benchmark lending rates today to help stimulate the economy amid the Covid restrictions. It’s one-year prime loan rate was cut 5 basis points to 3.65%, while its five-year rate was cut 15 basis points to 4.3%. The latter is hoped to help stimulate the housing market. A couple of more rate cuts are anticipated ahead of the end of the year. China’s currency continues to slide relative to the dollar as we move in the opposite direction in our monetary policy.

Severe drought and heat continued to stress crops in China’s Yangtze River Valley. Cropland impacted by the drought has expanded to 5.4 million acres in nine provinces in the basin, which is largely to the south and west of China’s main corn and soybean producing areas. The basin most impacted by the heat and drought accounts for 7.3% of China’s autumn rice crop (double-crop rice). The autumn rice crop produced 213 million tons last year, amounting to 31% of China’s total grain output in 2021. Sichuan is China’s largest hydropower producer in the river basin, but it’s power output is currently cut in half due to low water levels on the river. Many industry users are shut down, while residents have been asked not to set their thermostats below 26°C (78.8°F) to conserve power.

The Pro Farmer Midwest Crop Tour kicks off today. It will provide traders with their best information to date on the condition of the U.S. Midwest corn and soybean crops. Some traders are on the tour, but most will be monitoring field reports on social media, giving them a better handle on corn ear health across the Midwest, as well as soybean pod counts. We’ve heard plenty of anecdotal reports of both good and bad crops thus far this year. The tour provides a broader look at the crops to put those anecdotal reports into context. The tour is split in two parts – one part focusing on the western belt, while the other focuses on the east. The two groups will come together in southern Minnesota to combine their notes by the end of the week after both spend some time in Iowa. The field reports mean more to me than do the yield estimates at the end of the week, as they should give a better idea of the overall crop health that will impact the balance sheets.

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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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