Perspective: Morning Commentary for December 23

By: Arlan Suderman, Chief Commodities Economist

Fri, 23 Dec 2022, 14:18

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

December 23 – It’s the final day before the Christmas break, and Wall Street has one last chance for a Santa Claus rally. Stocks sold off hard Thursday following the release of better-than-expected third quarter GDP data that raised fears of a more hawkish Federal Reserve that might remove more money from the candy bowl. Yet, stocks rallied late in the session to come well-off their lows, continuing with modest follow-through overnight ahead of critical economic data released this morning. Today’s response to that data will be interesting, with the markets closed on Monday for the Christmas holiday break, and then with many traders remaining absent through the New Year holiday break until January 3^rd. The VIX spiked above 24 at one point on Thursday during the selloff, but it’s back below 22 this morning. The dollar index is trading near 104.3 this morning. Yields on 10-year Treasuries are trading near 3.73%, while yields on 2-year Treasuries are trading near 4.32%. Money flow was generally positive for the commodity sector overnight as well, with crude oil prices more than 2% higher, while the grain and oilseed markets posted modest gains.

Durable goods orders fell 2.1% month-on-month in November, down from 1.1% gains in October and lower than the 0.8% decline anticipated by analysts. However, durable goods orders minus transportation rose 0.2% month-on-month in November, down from 0.5% gains the previous month, but better than the 0.0% pace expected by analysts. Core capital goods orders that are seen as a measure of business confidence also rose by 0.2% month-on-month, although that was down from 0.7% gains the previous month. So, the bottom line here is that transportation orders fell notably in November, but durable goods orders otherwise continued to show modest growth.

Personal income rose 0.4% month-on-month in November, down from 0.7% gains in October, but still above analyst expectations of 0.3% gains. Meanwhile, personal consumption expenditures rose by 0.1% month-on-month in November, down from 0.9% gains the previous month, and down from 0.2% gains the previous month. The PCE price index rose 0.1% month-on-month in November, down from 0.4% the previous month and down from analyst expectations of 0.2%. The PCE price index was up 5.5% year-on-year in November, down from 6.1% the previous month and matching analyst expectations. The core PCE price index that excludes the more volatile food and energy sectors rose 0.2% month-on-month in November, down from 0.3% the previous month, but also matching analyst expectations. The core PCE price index rose 4.7% year-on-year in November, down from 6.1% year-on-year, but above analyst expectations of 4.6%.

Wall Street struggled to assess this morning’s data when it was initially released, with stock futures trading both sides of unchanged while traders dug deeper into the reports. The bottom line is that core durable goods orders show that the economy remains resilient, more than many on Wall Street anticipated. Meanwhile, personal income remains stronger than expected, and that shouldn’t be a surprise with both parties in Congress continuing to vote for additional stimulative programs in the face of the Federal Reserve’s attempts to tighten. We all love the benefits of those programs, but there’s a price that eventually must be paid. The headline inflation numbers are trending lower, but they have now reached levels supported by high wage inflation that will be difficult for the Fed to tame without inflicting more pain on the economy. In the end, stocks renewed their final attempt at a Santa Clause rally, with commodities firming as well.

More than 250 million people have, or have had, Covid-19 in China according to authorities there, with 37 million people infected each day at the current pace, and that number is growing. That means that roughly 1 in 5 people nationally have been infected, while more than half of the people in Beijing have had the virus already. Officials claim that the death toll remains in the single digits for this month, but anecdotal reports suggest that bodies are piling up at hospitals in Beijing, with crematoriums struggling to handle the surge. The bottom line is that Covid is moving very rapidly through the Chinese population, hitting its economy very hard. But that also suggests that China “may” have a robust recovery by the second quarter of next year, depending on how it handles the virus in the weeks ahead.

Some winterkill damage in wheat likely occurred in drought-stricken areas of eastern Colorado and western Kansas, while patchy damage may also have occurred stretching east into Indiana, where snow cover was insufficient. Seasonal strength has helped turn corn and wheat prices higher near-term, while soybeans continue to test critical overhead chart resistance. But we’ll need to get USDA’s January 12 set of crop reports before we’ll really have much confidence in the market’s trading action, with index fund rebalancing taking priority once we return following the Christmas and New Year’s holiday breaks. In the end, price is a function of supply and demand, but as modified by the flow of money. That money flow will continue to keep many traditional speculators on the sideline of these commodity markets, with open interest for many commodities at or near multi-year lows, while volume is largely driven by well-funded day-trading Algos. Look for South American production prospects to become a larger driver as we get beyond those January 12^th reports.

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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: Mid-Day Commentary for August 5

August 5 – The Dow Jones is ripping higher for yet another session, up safely over 500 points at the time of this writing to carve out another record high; the S&P and NASDAQ are a bit less enthusiastic but the former is still making its own record high, while the latter is less than 500 points off its own top thanks to a strong ongoing week of trade. The dollar is churning lower this morning in an effort to re-test Monday’s 1 ½-month low, while the ten-year note has flipped higher in the mid-morning hours. The CME FedWatch tool interesting has market odds of a quarter-point rate hike next month coming closer to a 50-50 proposition as crude oil prices decline.

Mike CastleWed, 05 Aug 2026, 15:19

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