Perspective: Morning Commentary for January 3

By: Arlan Suderman, Chief Commodities Economist

Tue, 03 Jan 2023, 14:24

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

January 3 – Happy 2023! Stock futures traded higher overnight, but they struggled to hold those gains as the dollar surged following better-than-expected inflation data in Germany earlier today. That could leave the Federal Reserve as the more hawkish central bank, raising risks for a stronger dollar and weaker U.S. economy, in the eyes of Wall Street traders. As a result, the VIX firmed to trade above 23 this morning, reflecting heightened levels of anxiety on Wall Street. The dollar index is trading near 104.5, which is a two-week high. Yields on 10-year Treasuries are trading near 3.74%, after falling notably overnight, while yields on 2-year Treasuries are trading near 4.36%. Crude oil prices fell as the dollar rallied, and they are now down roughly 1% on the session. The grain and oilseed markets did not trade overnight due to the holiday break.

German inflation at the consumer level was 9.6% year-on-year in December, coming in below analyst expectations of 10.7% and the second month in a row for a decline in the inflation rate. The decline was largely due to falling energy prices in December, as well as due to the government paying household energy bills as a one-off stimulus program to help consumers deal with inflation. Germany’s inflation, as well as that of much of Europe, has largely been driven by higher food and energy costs tied to the nearby Ukraine war. Energy prices eased somewhat last month, but they were still up 24.4% year-on-year in December, while food prices were up 20.7%. Today’s data raises hopes that the European Central Bank will be able to soften its hawkish policies going forward.

That could leave the Federal Reserve as the most hawkish central bank once again among the major economies of the world. Trading in the currency markets is expected to reflect what traders believe regarding monetary policy. Money is expected to flow toward the currency that is deemed to have the more hawkish monetary policy. As a result, we’re seeing money actively flow to the U.S. dollar this morning. The Federal Open Market Committee of the Federal Reserve is scheduled to release the minutes of its December policy meeting this afternoon at 2 p.m. Eastern Time, which should provide greater insights into the discussions taking place within the policy body, possibly leading to more volatility later today. Otherwise, this week’s focus will largely be on first-of-the-year positioning, index fund portfolio rebalancing, and on Friday’s monthly jobs numbers.

Several large cities in China have passed their Covid infection peaks, including Beijing, Shanghai, Chongqing, and Guangzhou, with the number of fever patients in these cities in decline now. That provided a boost for Chinese equities to start the new trading year, although the effects of the virus linger, with the spread expected to impact rural areas of the country in a couple of weeks when people travel for the Lunar New Year Holiday. Chinese data indicates that the portion of patients experiencing severe symptoms from Covid rose to 0.035% due to the virus’ quick spread, which was a bit higher than seen in previous outbreaks. The quick movement through the population suggests that we could see a rapid recovery early this year, although there are risks to that prognosis. The variant common in China now is different from that currently impacting Europe and the United States. China will be opening up its borders later this week, allowing people from other countries to enter. That could introduce the other variants into the population, resulting in a second, or possibly even a third wave of transmissions. As such, the road to recovery for China may be bumpy in the weeks ahead, but it does certainly appear to be coming.

Chinese demand for soybeans slowed over recent weeks as Covid began to spread across the country. Cash sources in Chine reduced their December and January usage estimates by a combined 1 million metric tons, with most of the January loadings now covered. That being the case, buyers will focus on booking soybeans for February loadings and beyond, with a primary focus on new-crop Brazilian supplies. China bought two February cargoes and one cargo for March loading from Brazil last week. Brazil’s soybean harvest started roughly two weeks ago in Mato Grosso with the earliest of the planted fields. It will slowly gain momentum in the days ahead, with soybeans flowing toward the ports to make the 45-day journey to China. U.S. shipments will continue to fill near-term needs to fill the gap until those Brazilian supplies arrive. StoneX Brazil pegged its soybean crop at 153.79 million metric tons this morning, upon releasing the results of its monthly customer survey, down from 155.09 mmt the previous month. Total corn production is pegged at 128.71 mmt, down from 130.34 mmt the previous month. Meanwhile, it should be noted that Ukraine expects a significant shift toward oilseed production in 2023, due to their higher value relative to other crops, and to their low input cost requirements.

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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: Mid-Day Commentary for August 6

August 6 – Stocks remain quietly mixed at midday as both the S&P 500 and Dow Jones remain just below their fresh all-time highs put in yesterday. This is allowing the VIX to cool to a four-week low below the 15.4 mark, reflecting the collective sigh of relief in the market amid largely better than expected U.S. economic data today. The dollar remains quietly in the green in its relatively tight range this week, trading at 99.9 at the time of writing. Treasuries remain elevated but have cooled from their recent peaks, with 30-year yields trading at 5.189%, 10-year yields trading at 4.647%, and 2-year yields trading at 4.229% at midday. Crude oil also remains quietly in the green, with nearby WTI up 2.3% on the day trading near $76.80 and nearby Brent up 2.4% on the day trading near $81.40. The ags remain mixed, with the wheat complex now squarely in the red while corn and soybeans cling to small gains, and the livestock complex largely pushes lower.

Mike CastleThu, 06 Aug 2026, 15:18

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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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