Perspective: Morning Commentary for December 15

By: Arlan Suderman, Chief Commodities Economist

Thu, 15 Dec 2022, 13:55

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 15 – Stock futures came under additional pressure overnight as Wall Street responds to the Federal Reserve’s determination to remain hawkish in the face of risks to the economy presented by those policies. Meanwhile, there remains very little focus on the failure of Congress to fund the government ahead of tomorrow’s deadline. Both the Bank of England and the European Central Bank raised their benchmark rates by 50 basis points this morning, on top of the Fed’s 50-basis point rate hike on Wednesday. Yet, the VIX is trading below 22 again this morning, reflecting very little panic on Wall Street. The dollar index is stronger on the policy decision at 104.1. Yields on 10-year Treasuries are trading near 3.47%, while yields on 2-year Treasuries are trading near 4.22%. Crude oil prices were weaker in quiet trading overnight, while the grain and oilseed markets were mixed to firmer overnight.

Retail sales fell 0.6% month-on-month in November, which included Black Friday sales late in the month. That compares to a rise of 1.3% in October, and to analyst expectations that sales would fall 0.2%. Yet, overall sales were still up 6.5% year-on-year, which is a positive. Sales for September, October, and November combined were up 7.7% year-on-year. Retail sales were down 0.8% month-on-month, but up 5.4% year-on-year. Gasoline sales were up 16.2% over the previous year, while food service was up 14.1%. Today’s monthly data was a big disappointment, but sales are still substantially higher than a year ago, and that is only partially due to inflation. Meanwhile, retail sales in China fell 5.9% year-on-year in November, rather than the increase that we saw here in the States, reflecting their current battle with Covid. Those Covid cases are exploding higher much faster than expected, suggesting that China will reach herd immunity faster than expected early next year. Other data released this morning showed that first-time claims for unemployment benefits fell to 211K in the week ending December 10, down from 231K the previous week and below analyst expectations of 230K claims. Continuing claims rose just 1K to 1.671 million. This suggests that a tight jobs market continues to support wage inflation.

Fed Day came and went like many others this year, with the Fed once again needing to convince the market that it will remain more hawkish for a longer period of time than expected by traders. The Federal Reserve released its statement, which raised the benchmark interest rate another 50 basis points as expected. The rest of the material released though argued for higher peak rates and for a longer duration than what the market had priced in, as we expected, proving the market overly anxious once again for a dovish pivot. The unemployment rate is expected to move to 4.6% both in 2023 and 2024, although I question whether that is high enough to sufficiently cool wage inflation. Fed Chair Jerome Powell’s press conference added to the hawkish views initially, adding to strength in the VIX and the dollar, while adding to losses for the equities and many of the commodities. However, market concerns seemed to ease the longer he talked, and many of the markets returned closer to their pre-report levels by the end of the day – at least stocks were well off their lows, the dollar back negative again and the VIX settling lower as well. Treasury yields ended the day little changed from the previous session. However, stocks remained weak overnight.

The Fed’s dot plot graphic puts the peak rate above 5.1% in the year ahead, which is up roughly a quarter of a percent from market expectations and up 50 basis points from the Fed’s previous projection. However, some Fed members see the benchmark interest rate above 5.6% in late 2024, while others see it back down to 3.1% by that point. Only two of the Fed members saw the peak rate staying below 5.0% next year. That suggests that most Fed members feel they need to keep momentum going until they see more substantial progress at taming inflation – especially wage inflation. The released statement received unanimous support from all voting members – doves and hawks. That says that this Fed is not ready to pivot in any meaningful way until it is convinced that inflation is well under control. It does not want to be guilty of letting up on its policy too soon, allowing inflation to get an even stronger hold on the economy that it already does. It’s primary focus now is determining how high rates need to go, and how long they need to stay there. The dot plot graphic shows rates going down in 2024, but Powell emphasized that their priority currently is to maintain a policy that will take inflation all the way down to 2% as long as it is necessary to reach that objective. Until then, he doesn’t expect the Fed to even discuss rate cuts. Powell stated that, while we’ve seen some encouraging inflation data the past couple of months, “it will take substantially more evidence to give confidence inflation is on a sustained downward path.” The Fed’s current outlook doesn’t see inflation back at the targeted 2% rate for three more years, staying above 3% through next year. The bottom line is that this keeps traders viewing commodity fundamentals through the lens of recession fears.

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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: Mid-Day Commentary for August 6

August 6 – Stocks remain quietly mixed at midday as both the S&P 500 and Dow Jones remain just below their fresh all-time highs put in yesterday. This is allowing the VIX to cool to a four-week low below the 15.4 mark, reflecting the collective sigh of relief in the market amid largely better than expected U.S. economic data today. The dollar remains quietly in the green in its relatively tight range this week, trading at 99.9 at the time of writing. Treasuries remain elevated but have cooled from their recent peaks, with 30-year yields trading at 5.189%, 10-year yields trading at 4.647%, and 2-year yields trading at 4.229% at midday. Crude oil also remains quietly in the green, with nearby WTI up 2.3% on the day trading near $76.80 and nearby Brent up 2.4% on the day trading near $81.40. The ags remain mixed, with the wheat complex now squarely in the red while corn and soybeans cling to small gains, and the livestock complex largely pushes lower.

Mike CastleThu, 06 Aug 2026, 15:18

Grains & Oilseeds

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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