Perspective: Morning Commentary for February 17

By: Arlan Suderman, Chief Commodities Economist

Fri, 17 Feb 2023, 14:46

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

February 17 – Fears of a hawkish Federal Reserve weighed on Wall Street this morning as we approach a three-day holiday weekend. The U.S. markets will be closed for the President’s Day holiday on Monday. Traders are wary of going into the weekend with too much ownership in the equities following this week’s hot inflation and retail sales data releases. Recession fears are returning once again, with Treasury yields pushing to fresh three-month highs. The VIX is trading near 21 this morning, reflecting a modest rise in anxiety on Wall Street heading into the weekend, while the dollar index is trading at six-week highs near 104.3. Yields on 10-year Treasuries are trading near 3.89%, while yields on 2-year Treasuries are trading near 4.67%. Crude oi prices are 4% lower on those recession fears, but the grain and oilseed markets were mixed to higher as they held their ground despite the strong dollar and mounting recession fears.

This week’s data sent a clear message to Wall Street – the Fed has more work to do to bring inflation down to its 2% mandated level. Inflation in the service sector, which is heavily labor dependent, remains strong and it is trending higher. Commodity inflation is creeping back in as well. I criticized the Fed for being late to the game, but I applaud its tenacity thus far in staying the course. In fact, one can make an argument that it should have raised its benchmark rate another 50 basis points instead of 25 at its last meeting, which is what two members of the FOMC argued that it should do.

Is America’s problem that there is too much stimulus still in the economy, creating strong demand that exceeds the supply of goods, services, and human resources, or are we simply addicted to spending? We were a service-oriented economy prior to the pandemic, but that changed when we were told to stay at home while we figured out the risks with the Covid-19 virus back in the spring of 2020. Sitting at home full of fear of the unknown, we realized that we had government stimulus checks in our accounts. It felt good to buy things, and we rediscovered the addiction of online shopping, shifting us to a goods-oriented economy. The service sector is coming back, but we still love to shop.

Stimulus money remains in the economy to support that spending, but we’re also increasing the use of credit to feed our new-developed habit. Consumer debt across all categories now totals a record $16.9 trillion, up $1.3 trillion on the year. That increase in the use of credit comes as interest rates are rapidly rising, decreasing our ability to pay it off. Elected leaders know that we want our stuff, and so they are committing to giving us more of those wanted things for little to no cost, pushing our national public debt to new records, and threatening our nation’s ability to pay its bills. The annual interest expense on our $31.6 trillion national debt is $533 billion, and it is rapidly rising as rates increase. The Congressional Budget Office warned this week that we are on a path to borrow another $19 trillion over the next 10 years. Finding buyers of the debt certificates needed to fund that spending will require higher interest rates, aside from what the Federal Reserve is doing. Failure to find enough buyers will likely necessitate that the Federal Reserve will need to again increase its quantitative easing – printing money to buy our own debt – which is another way of saying that we will be monetizing our debt. The Fed already owns a quarter of our national debt from doing that very thing. That increases the supply of money, which is inflationary. This is not a political problem. It is a cultural problem. This nation was built on hard work and the conviction that doing the right thing would pay long-term rewards. We’ve become a microwave society that wants what we want now, and we’ll worry about paying for it later. But will we be able to pay this tab?

Black Sea risks continue to escalate, with one Russian diplomat suggesting that his country may be close to war with the United States. It’s day 360 of the war, with every indication that Russia intends to throw everything necessary at the conflict to make sure that it wins, and the West increasingly offering a broader spectrum of assistance to make sure that Russia does not win. This is a commodity-rich area of the world, including wheat, corn, crude oil, natural gas, fertilizer, and many more products necessary to keep the world going. Further escalation of this conflict includes a risk that the movement of these commodities out of this region will be further reduced. The markets built in a large premium to account for that risk a year ago, but most of that premium withered away under the fear of economic recession over the past six to nine months. But the risk is still there – perhaps greater today than it was a year ago. Keep your eyes on this region.

Social media reports indicate that widespread frost was seen in Argentina last night, on top of the drought problems, but a look at the data shows that simply is not the case. Frost was rather isolated where it occurred. Argentina’s corn and soybean crops are still getting smaller, but harvest results in Brazil suggest that it is harvesting a very large soybean crop and a decent summer corn crop. Very good yields in the north are more than making up for losses in drier areas of southern Brazil. Storage is at a premium, pushing more soybeans onto the market as the harvest pace picks up. Soybeans are moving to China, and they’re also moving south to Argentine crushing plants. The above factors were largely overshadowed this week by the broader macro-economic fears of recession, leading to choppy weak trade.

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Perspective: Mid-Day Commentary for August 7

August 7 – Stocks are looking to end a strong week on a strong note, with the major indexes all in the green at the time of writing. The VIX touched a nearly seven-month low earlier in the session and remains muted as it hovers just below the 15-mark as this morning’s ugly labor market data helps ease hawkish Fed jitters. The dollar has rebounded from its nearly two-month low earlier in the session but remains in the red on the day, trading at 99.55 at the time of writing. Treasuries have had a very volatile day, with yields tanking following this morning’s Non-Farm Payrolls release but bouncing back into midday, with 30-year yields now trading at 5.209%, 10-year yields trading at 4.654%, and 2-year yields trading at 4.204%. Crude oil has risen from the morning lows as traders eye the weekend market closure for potential geopolitical developments, with nearby WTI now down only 0.2% on the day to trade around $78.10 and nearby Brent breaking into the green, up 1.25% on the day to trade above $83.50. The ags are largely mixed, with the grains and oilseeds mostly in the green, save for a mixed picture in the soy complex, while live and feeder cattle futures move in opposite directions, with the former adding to yesterday’s sharp losses and the latter attempting a rebound.

Mike CastleFri, 07 Aug 2026, 17:09

Grains & Oilseeds

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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