Perspective: Morning Commentary for December 21

By: Arlan Suderman, Chief Commodities Economist

Tue, 21 Dec 2021, 14:25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 21 – The roller coaster continues on Wall Street today, as stock futures suggest a strong open for the markets this morning, following a round of liquidation on Monday. Omicron fears abound in the global markets, but an overnight bounce provided encouragement, boosted by strong quarterly earnings from Nike and a positive outlook from chipmaker Micron. The latter eased inflation concerns a bit, while there was also chatter that the Biden Administration will avoid lockdowns for now in its strategy to curb the spread of the Omicron variant of Covid-19. The VIX is trading near 22 this morning, as fears slowly ease on Wall Street once again, while the dollar index is trading near 96.4. Yields on 10-year Treasuries are firming to trade near 1.47% this morning. Crude oil prices are more than 2% higher, while the Ags were steady to mixed overnight in relatively choppy trade in this holiday-shortened week. The markets will be closed on Friday to celebrate the Christmas holiday.

There will be no new lockdowns from the Biden Administration at this time, as it responds to calls to “do something” about the Omicron variant of Covid-19. Instead, the Administration will purchase 500 million at-home rapid tests that Americans can purchase online for free, while continuing to push for vaccinations. Those kits are expected to become available to Americans in January. Omicron may have run its course by that time, as fast as it is moving. Australia is following a similar path, noting that hospitalizations remain relatively low, despite a surge in Omicron cases. Prime Minister Scott Morrison stated, “We’re not going back to lockdowns. We’re going forward to live with this virus with common sense and responsibility.” The above contrasts with a much different approach in Europe, where countries across the continent are considering new curbs on people’s ability to move about.

Omicron was first identified in South Africa last month, and it accounted for less than 1% of the U.S. cases three weeks ago. But the Omicron variant accounts for 73% of all new cases in the United States today. It spreads very rapidly, although usually with mild symptoms so that people often think they have a common cold. The first death related to the Omicron variant has been recorded in the United States, although no details are known relative to other possible health complications. Europe and China are implementing lockdowns and restrictions to various degrees, while the United States and Australia remain more open. The two strategies are very divergent in nature, with significantly different implications for their respective economies.

China reported 57 new locally transmitted Covid-19 cases yesterday, including 43 in Shanxi, with 42 of those being in its capital city of Xi’an. There were also 8 new cases in Zhejiang, where the numbers seem to be declining, as well as 6 in Guangdong. China reports identifying 6 Omicron cases in three Chinese cities within a week. Omicron’s ability to spread rapidly presents significant challenges to China’s zero-tolerance policy. Two imported cases of Omicron were reported in Changsha on the 18^th, along with one in Tianjin, following three cases in Guangzhou earlier in the week. The Guangzhou case flew in from Shanghai after 14 days of hotel quarantine following his arrival in China. He then passed the infection to an elderly woman and her daughter living in the same building. The patient had repeatedly tested negative for Covid-19 during quarantine in Shanghai, but he was then found positive during his home isolation.

China has rolled out even more stringent Covid-19 quarantine and border control rules to counter the threat of Omicron. It considers its borders the top priority to implement prevention and strengthen control at the source. State media reports that quarantine times must be recalculated and extended for “high risk” people. Management in centralized quarantine hotels will also be strengthened to prevent cross-contamination. People working in high-risk areas such as customs entry-exit points will be subject to “closed-loop” management and more frequent testing. Contact tracing must start immediately if someone tests positive in the centralized quarantine hotels. All of this creates further headwinds for China’s economy, which is already slowing notably.

Omicron directly impacts energy consumption, via official travel, or simply people’s reluctance to travel, leaving prices in the sector susceptible to the ebb and flow of fear emotions. However, its impact on the food-based commodities is less significant, leaving them as an attractive alternative for fund managers seeking a hedge against inflation, especially since one can point to fundamental factors of support in most cases to justify ownership. Nonetheless, end-of-the-year trading is erratic at times, with the holidays amplifying that tendency as well.

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Matt ZellerTue, 04 Aug 2026, 12:43

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Matt ZellerMon, 03 Aug 2026, 12:45

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July 31 – Stocks are clinging to modest gains at midday, with largely better than expected U.S. economic data today providing some optimism to end the week. The VIX briefly spiked to 18.7 earlier in the session but has since settled back to 17.15 at midday. The dollar has given back some of its gains on the day, now only modestly in the green, up roughly 0.1% to trade near 100.06 at the time of writing. Treasury action has been mixed thus far today, but yields remain notably elevated, with 30-year yields trading just below their 19-year high at 5.267%, 10-year yields just off their one-and-a-half-year high at 4.74%, and 2-year yields right at 4.30%. Crude oil remains quietly higher, with nearby WTI up 0.9% on the day near $84.70 and nearby Brent up 0.7% to trade near $87.40. The grains and oilseeds are widely lower at midday, with the wheat complex leading the way down, while the livestock sector is largely in the green.

Mike CastleFri, 31 Jul 2026, 16:33

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