Perspective: Morning Commentary for July 28

By: Arlan Suderman, Chief Commodities Economist

Thu, 28 Jul 2022, 13:26

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

July 28 – The United States is in a recession, according to the latest data. But then again, that’s not a surprise to Wall Street, which is future looking. It’s been pricing in expectations of a recession. I still believe that stagflation is our greater threat, but that’s a discussion for later. The Federal Reserve did as Wall Street expected on Wednesday, and Wall Street has its anticipated confirmation of a technical recession. As such, it’s taking the news in stride, with stocks firming following the data’s release, while the VIX falls below 23 as fears ease on Wall Street. The dollar index is trading near 106.6 this morning, after falling to fresh three-week lows near 106 earlier in the session. Yields on 10-year Treasuries are trading at three-month lows near 2.66% as yields on 2-year Treasuries fall to 2.82% following this morning’s data release. Crude oil prices are up roughly 2%, while the grain and oilseed markets are mostly higher as well. Stagflation means that the economy is stagnant while inflation remains a problem. That’s what Wall Street is pricing in this morning.

Gross domestic product contracted at an annualized rate of 0.9% in the second quarter, after contracting by 1.6% in the first quarter. That gives us consecutive quarters of negative GDP growth, which is what defines a recession. Analysts had anticipated 0.5% growth, although the Atlanta Federal Reserve had accurately predicted this. Personal consumption expenditures increased at an annual rate of 1.0% in the second quarter, down from 1.8% growth in the first quarter and down from analyst expectations of 1.3% growth.

First-time claims for unemployment benefits totaled 256K in the week ending July 23, which was above analyst expectations of 249K. Furthermore, the previous week’s total was revised to 261K claims, an upward revision of 10K. This pushed the four-week moving average to 249.25K, up from 243K the previous week. But continuing claims fell 25K to 1.359 million, with the four-week moving average at 1.362 million. That’s just above 50-year lows.

Let’s now look at both of these reports in context. The GDP numbers reflect a stagnant economy. There’s no question about that. The number was pulled negative in great part because of another quarter of declining inventories at retail stores and car dealerships due to supply chain issues. The jobs market remains extremely tight because employers continue to try to hire people to fill orders for goods and services – to rebuild inventories. Personal expenditures are still rising, albeit at a slower-than-expected pace. The economy is behaving in a stagnant manner – not a recessionary manner. Neither is good, but policymakers need to properly define the problem to appropriately address the issue. Inflation is the primary culprit, largely due to demand exceeding supply. There are various reasons for that, including the massive stimulus that created a surge in demand above normal levels at a time when supply chains were disrupted by Covid, and by the policies of the current and past administrations.

The Federal Reserve can work on the demand side by withdrawing stimulus – shrinking the balance sheet – and by raising its benchmark interest rate. That’s what it’s doing, albeit late. The job would have been much easier if it had recognized the problem a year earlier. However, it also needs assistance from the fiscal side, which means action by Congress. That’s more difficult. The Federal Reserve expressed concerns about a slowing economy in the second quarter on Wednesday, while also re-emphasizing its commitment to bring inflation down to 2%. We’ll get another round of inflation data tomorrow morning when we see more details of personal consumption expenditures in June. Analysts expect the headline inflation number for this measuring stick to be at 6.7%, up from 6.3% the previous month, with the core PCE index unchanged at 4.7%. Inflation is a symptom of the problem, which the Fed is now trying to address. The Fed has regained Wall Street’s confidence, for now, that it has a handle on the problem, and an appropriate plan for dealing with it. Fed fund futures trading this morning is pricing in expectations that the next rate hike will fall to a 50-basis point increase in September, followed by a 25-basis point rise in both November and December.

Confidence on Wall Street is a fickle thing that can change with the next headline, but for now, it’s allowing the commodity markets to focus more on supply and demand fundamentals. Day two of the North Dakota wheat tour again found good yields – above average yields – but not record yields. However, the primary focus of the trade continues this week to be on next week’s expected resurgence of a hot dry pattern spreading over much of the Midwest as we turn the calendar to August, which “may” continue into mid-August or longer.

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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

Grains & Oilseeds

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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