Perspective: Morning Commentary for January 11

By: Arlan Suderman, Chief Commodities Economist

Tue, 11 Jan 2022, 14:36

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

January 11 – Stocks reversed large early losses Monday, but they’re still struggling to trade in the green this morning ahead of key statements from the Federal Reserve. Omicron remains in the headlines, with a record 1.35 million positive Covid tests reported on Monday, not counting the myriad of unreported at-home tests. The VIX is hovering around 20 this morning, as traders digest the news of the day. The dollar index is trading near 96.0, as yields on 10-year Treasuries consolidate near 1.77%. Crude oil prices are 2% higher, while the Ags are mixed to higher as well in early trade.

Two public appearances are scheduled today by members of the Federal Reserve. First, Kansas City Fed President Esther George is scheduled to speak on the economic and monetary policy outlook at 8:30 a.m. CT. George was outspoken back in August about the need for the central bank to shift hawkish to get inflation under control, back when Fed Chair Jerome Powell was still calling inflation transitory. Powell is scheduled to testify at 9:00 a.m. CT at his nomination hearing in the Senate in his effort to serve another four-year term at the helm of the Fed. He is expected to promise Senators that the Fed will reign in inflation under his leadership and not allow it to get out of control, even though he was on the wrong side of it for most of the past year, telling us that it was temporary and inconsequential.

I shouldn’t be too hard on Powell, as he mirrors what the Fed has been doing for decades – leading from behind. A look at the influencers of Federal Reserve members finds that they are largely academics who have never run a business, and they lack real-world experience in the business economy. There are good ones at the Fed, but they are largely outnumbered. George was not a voting member in 2021, but she rotates back as a voting member for 2022. Yet, this discussion over whether the Federal Reserve can effectively bring inflation under control will be one of the key questions of 2022 for both the economy and for the markets. Policies that are too aggressive could quickly bring the economy to its knees. Policies that are too slow in their response could allow inflation to spiral out of control as it did in the late 1970s. In that case, Paul Volker had to take dramatic steps that pushed interest rates toward 20% in some cases in order to bring inflation under control. Powell will be questioned today by politicians who largely do not understand monetary policy either, but they know that their constituents are troubled by the current inflation problem, and they want it brought under control. Powell’s testimony will be followed by key inflation data releases the next two mornings to keep the issue on the front burner for Wall Street traders.

Is Omicron peaking? Monday’s CDC data would argue otherwise, but the South African history would suggest perhaps so. We do know that flight cancellations are declining as staffing issues start to get worked out. FlightAware reports “just” 658 U.S. cancellations thus far this morning, along with 394 delays. Both numbers are trending lower this week. Receiving little attention has been the impact of Omicron on the meat industry. Employee absenteeism due to Covid – sick, scared, taking care of kids out of school, etc. – combined with absent meat inspectors slowed chain speeds at processors over the past couple of weeks. Last week’s cow slaughter was estimated at 620K head, down 40K from expectations and even 15K from expectations mid-week last week. Hog slaughter totaled 2.578 million head last week, down 3% from expectations. Cash cattle and hog prices are under pressure as a result of the declining demand for animals, while meat supplies are tightening, pushing prices higher for retailers. The sense in the industry currently is that this week “isn’t worse than last week, but it’s not necessarily better either.” That would suggest that perhaps we’ve plateaued.

China reported 192 new Covid cases yesterday, including 110 that were locally transmitted. Henan was responsible for 87 of the cases, with 13 in Shannxi and 10 in Tianjin. Most troubling to authorities is the 10 cases in Tianjin, because some of these were third generation cases, meaning the virus has been hidden and spreading undetected for a while. They still do not know the origin of this outbreak, so therefore they do not know how many people have been exposed and may also be spreading it. As a result, authorities have shut down all public transportation from Tianjin to Beijing to protect the nation’s capital. This will add to China’s economic challenges, in addition to the lockdowns in Xi’an and elsewhere to control Covid. In other news today, China’s Commerce Ministry announced today that it will maintain anti-dumping tariffs on U.S. distillers’ grains for another year.

Dry areas of Argentina have a window of opportunity to get rain relief early next week before the pattern reverts dry again. Those rains could prove pivotal for Argentina’s grain production this year, depending on how they live up to expectations. For now, traders want to get through tomorrow’s large set of USDA crop reports. The January reports hold a plethora of data – the largest of the year – with some surprises almost guaranteed. The Algos will love it, while producers and end users fear it. Of greatest focus will be 1) scope of South American production losses, 2) potential surprises in the U.S. quarterly stocks numbers, and 3) whether USDA reduces U.S. soybean exports in this report?

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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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