Perspective: Morning Commentary for January 26

By: Arlan Suderman, Chief Commodities Economist

Thu, 26 Jan 2023, 14:26

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

January 26 – Stocks traded modestly higher overnight, ahead of a plethora of economic data to provide fodder for today’s trading action. Stock futures initially sold off following the data release, but then quickly recovered to build on overnight gains again. The VIX traded quietly near 19 overnight, while the dollar index traded near 101.6, after hitting a fresh eight-month low overnight at 101.5. Yields on 10-year Treasuries are trading near 3.47%, while yields on 2-year Treasuries are trading near 4.16%. Crude oil prices were more than 2% higher, while the grain and oilseed markets were all higher in overnight trade.

Fourth quarter gross domestic product grew at an annualized pace of 2.9%, down from 3.2% the prior quarter, but beating analyst estimates of 2.7% growth. Personal consumption expenditures grew at an annualized pace of 2.1% in the fourth quarter, down from 2.3% in the third quarter, and down from analyst expectations of 2.6%. This says that the economy continued to grow at a healthy pace in the fourth quarter, even though certain sectors within the economy were in a recession. Those sectors were offset by others that were still seeing healthy growth. This happened despite less consumer spending than anticipated during the quarter. Instead, personal savings grew to $552.9 billion during the quarter, up from $507.7 billion the previous quarter, as consumer sentiment slid lower due to the uncertainty in the economy. That represents 2.9% of disposable personal income, up from 2.7% the previous quarter. This suggests that the consumer has that much more money to spend if he/she starts feeling better about the economy, meaning that inflation could come back if there’s still too much stimulus in the system.

Durable goods orders in December surged 5.6% month-on-month in December, doubling analyst estimates of a 2.8% increase, and much better than the 1.7% decline seen in November. However, durable goods orders minus transportation fell 0.1% month-on-month in December. That’s better than the -0.2% expected, but a bit worse than the +0.1 posted the previous month. Core capital goods orders fell 0.2% month-on-month in December, matching analyst expectations, and down from flat orders the previous month. Unfilled orders for manufactured durable goods have now been increasing for 28 consecutive months, led by transportation equipment orders being up in 22 of the past 23 months. The steady rise in transportation orders says something about the industry’s view of the economy. It was also interesting to note that nondefense new orders for capital goods rose 19.2%, with unfilled orders up another 2.4% in December, also reflecting a business view of the economy.

The Chicago Fed national activity index is a weighted average of 85 existing monthly indicators of national economic activity constructed to have an average value of zero when the economy is growing at a trend rate, with a standard deviation of one. The index for December was -0.49, which was very close to the -0.51 posted in November. This says that the economy was growing at a below-trend rate in both November and in December. Of course, this is a lagging indicator and not predictive, but it averages those sectors doing well with those sectors already in recession.

First-time claims for unemployment benefits were down to just 186K in the week ending January 21, down from an already low 192K the previous week. This dropped the four-week moving average to 197.5K claims, down from 206.75K the previous week. Yet, continuing claims for the week ending January 14 rose by 20K to 1.675 million. That’s still a historically low number, but we’ll need to watch the trend. Overall, most of the job numbers continue to show that we have a very tight job market. The headlines are filled with notices of layoffs in the tech sector, but they don’t mention how those jobs are being replaced by openings in other sectors. Overall, today’s data releases outlined above provide little fodder to suggest that the Federal Reserve will pivot from its current monetary policy if it sticks with the objectives that it previously stated.

The dollar index is sliding lower as Treasury yields soften following this morning’s data release, which has thus far supported positive money flow into the energy and grain and oilseed markets. There’s a growing sentiment on Wall Street that a soft landing of the economy is possible, with China’s post-Covid recovery supporting increased demand for commodities. Add to that the fact that tensions are escalating in the Ukraine conflict as the West gets more directly involved by providing more powerful military equipment. This rally is more money flow currently than it is direct supply and demand fundamentals, but for now, that is supporting prices heading into today’s session.

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Matt ZellerWed, 05 Aug 2026, 12:39

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Matt ZellerTue, 04 Aug 2026, 12:43

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Mike CastleMon, 03 Aug 2026, 15:10

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