Perspective: Morning Commentary for March 17

By: Arlan Suderman, Chief Commodities Economist

Thu, 17 Mar 2022, 13:23

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 17 – The Russian invasion of Ukraine started its fourth week with bombs continuing to pound its cities. Wall Street is growing increasingly desensitized to the daily news of war, with stocks pulling back from yesterday’s solid gains on the heels of the Fed’s first interest rate hike since 2018. The VIX is trading at roughly four-week lows near 27 this morning, which is its lowest level since before the war started. The dollar index is trading near 98.4, while yields on 10-year Treasuries are trading near 2.15%, after popping to a 33-month high near 2.25% yesterday. Crude oil prices are 6% higher as they bounce following their recent collapse, while the Ags are mixed.

First-time claims for unemployment benefits fell to 214K in the week ending February 12, down from 229K the previous week and below analyst expectations of 221K. Continuing claims fell to a 50+ year low of 1.419 million, down 71K from the previous week, providing more evidence of a tight labor market. Other data showed housing starts rising to an annualized rate of 1.769 million in February, up from 1.657 million the previous month and above expectations of 1.700 million. Permits for new starts rose to an annualized rate of 1.859 million, down from 1.895 million the previous month, but up from expectations of 1.850 million. The Philadelphia Fed manufacturing index for March came in at 27.4, up from 16 the previous month and well above analyst expectations of 15.

The Federal Reserve turned hawkish on Wednesday, although the action was overshadowed by the uncertainty of the Ukrainian war. Some would debate the hawkish term. They certainly could have done more, but monetary policy is shifting in that direction as the Fed tries to tame inflation amid unprecedented amounts of stimulus. Fed Chair Jerome Powell continues to blame supply chain disruptions for the current inflation problem, while ignoring the Fed’s contribution to the problem. It will impact a person’s spending habits if I give them a fistful of cash. That’s essentially what Congress and the Fed together did – they placed a mountain of cash in the hands of the consumer, shifting spending more toward goods with less emphasis on services than in the past. This artificially elevated demand for goods tested production and supply chains as we came out of the pandemic – yes – but that straining continues well beyond the pandemic as well. The supply chain wasn’t built to handle this level of demand for goods. Now you can add a tight labor market to the equation, which amplifies the problem.

Personal Consumption Expenditure inflation is expected to rise 4.3% this year, according to Fed projections, which is dramatically higher than the 2.6% projected in December when Fed members first seemed to sense the urgency of the inflation problem. Core PCE inflation is expected to come in at 4.1%, up from 2.75 in December. Expectations for the next two years are rising as well. The Fed is clearly more worried about inflation, as the rest of us have been for some time. As a result, they apparently discussed at length the need to start shrinking their balance sheet. Powell said they’ll announce the details of that at “a” later meeting. I interpret that to mean that they still can’t agree on a plan, but they hope to do so at some point in the future. I expect a focus on reducing ownership of mortgage-backed securities, which would have a greater impact on the longer end of the curve.

The Fed raised its benchmark interest rate 25 basis points on Wednesday, when it just finished tapering expansion of the balance sheet – inserting stimulus – last week. More than $6 trillion in stimulus remains in the economy until they withdraw it – shrinking their balance sheet. The market has 8 rate hikes priced in for this year, and four next year, which means it expects one of these meetings to see a 50-basis point increase. Treasury rates remain negative when adjusted for inflation, making an argument for getting started with the increases. Powell stated that he sees little increased risk of a recession, although the Fed projects this year’s gross domestic product to rise by 2.8%, which is down from its 4.0% projection in December, so it clearly sees slower growth. Raising rates too quickly could stall out the economy, while raising rates and shrinking the balance sheet too slowly could result in a stagnant economy with runaway inflation, similar to what we had 40 years ago. Nobody wants that. However, it’s estimated that the economy currently has $1.6 trillion in excessive liquidity that could be siphoned off without negatively impacting our financial well-being. That’s the balancing act currently before the Fed.

China’s economy is struggling, with some indications that it is doing worse than the government data suggests, largely due to its Covid lockdowns as it battles the fast-spreading Omicron variant. As a result, it’s starting to transition to a hybrid plan that creates bubble environments for companies to remain open. Workers must essentially live in these bubbles where they work. Leaving the bubble would require an extended quarantine time. Apple supplier Foxconn’s plant in Shenzhen is one of the first to be allowed to apply the bubble concept. Otherwise, widespread lockdowns continue to weigh on China’s economy, spurring the government to add additional stimulus.

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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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Morning Grain Comments 8-6

Morning Grain Market Comments - Matt Zeller

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Grains & Oilseeds

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