Perspective: Morning Commentary for January 19

By: Arlan Suderman, Chief Commodities Economist

Thu, 19 Jan 2023, 14:25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

January 19 – Stock futures continued to drop overnight in follow-through selling following Wednesday’s collapse as traders again worry about recession risks. Unfortunately, this morning’s data releases did little to ease those fears. The VIX rose modestly to trade near 22 this morning, reflecting the return of some anxiety on Wall Street. The dollar index traded near 102.2. Yields on 10-year Treasuries are trading near 3.41%, pushing higher following this morning’s data release, with yields on 2-year Treasuries trading near 4.12%. Crude oil prices are firming to post small gains, while the grain and oilseed markets traded modestly lower in overnight action.

Housing starts fell to an annualized rate of 1.362 million units in December, down from a downwardly revised 1.401 million the previous month, but up a bit from analyst expectations of 1.362 million. Permits for new starts fell to an annualized rate of 1.330 in December, down from 1.351 million the previous month, and below analyst expectations of 1.380 million. “High” mortgage rates and the uncertainty of the future are largely responsible for the current dismal performance of the housing sector. Consumers will eventually adjust to the new reality and return to the housing market, especially if some of the uncertainty clears up. It’s interesting to note that mortgage applications for new housing purchases jumped 24.7% week-on-week last week, while applications for refinancing jumped 34.2%. Seeing those big numbers tells me two things. First, the number of applications the prior week must have been very small, and second, it only took about a 30-basis-point drop in Treasury yields to bring some consumers back to the mortgage market. I felt very fortunate to get a “low” 10% mortgage rate in 1990 at a time when home building in our area was very active. The consumer eventually adjusts if you can reduce the uncertainty in the economy.

The Philadelphia Fed manufacturing index for January was -8.9. That’s an improvement from the -13.8 posted in December and better than the -10.3 expected by analysts, but it still shows contraction month-on-month. Shipments in the region increased this month, but new orders and employment both declined modestly. Manufacturing prices saw continued downward pressure this month. The survey’s future indicators all remained positive, although they are still trending lower. Firms reported positive effects of lower energy prices that have lowered the cost of production, which helped to improve margins.

First-time claims for unemployment benefits fell to just 190K in the week ending January 14, down from 205K the previous week and below analyst expectations of 215K. That dropped the four-week moving average to 206K claims. Continuing claims for the week ending January seven rose 17K to 1.647 million, although that’s still a relatively low number from a historical standpoint. The bottom line from today’s data is that some sectors of our economy are already in a recession that is reducing a need for workers. However, the broader data suggests that other areas of the economy are still absorbing workers, keeping the overall employment picture tight, supporting ongoing wage inflation. We are seeing some early indications that may be starting to change, but not enough to give the Fed confidence to pivot its monetary policy. Policymakers know that there is still enough stimulus in the system that we could see a resurgence in inflation if consumer sentiment were to recover and energy prices rebound. As such, I still expect the Fed to continue to slow the pace of rate hikes, but I do not see anything in the data yet to suggest to me that the Fed will be lowering rates this year, as the market anticipates. Yet even a stabilizing of rates can return some degree of certainty to the markets, allowing the consumer to adjust.

Russia continues to slow-walk inspections of ships going to and from the three approved Ukrainian ports, increasing costs for shippers and reducing volumes of products exported. The slowdown started in October when Russia appeared frustrated with the volume of shipments coming from Ukraine at the expense of Russian exports. All ships must be inspected before going to Ukrainian ports under the grain initiative, and then inspected again after departure at the Joint Coordination Center. Russia reduced the number of inspection teams back in October from 5 down to 3 without any explanation. It then dramatically increased the time required for each inspection to four or more hours, resulting in just five to seven inspections per day. That’s well below the 16 to 18 inspections needed to keep things flowing. As a result, 121 ships were waiting for inspection at the JCC yesterday – 28 loaded with grain heading out from Ukraine and 93 heading toward Ukraine ports. The average wait time is two to five weeks, adding millions of dollars to the cost of shipping. Ukraine officials estimate that this slowdown reduces monthly export shipments by roughly 3 million metric tons, reducing revenue they need for planting next year’s crops.

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Mike CastleThu, 06 Aug 2026, 13:24

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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