Perspective: Morning Commentary for March 28

By: Arlan Suderman, Chief Commodities Economist

Tue, 28 Mar 2023, 13:22

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

March 28 – Bank contagion fears continue to ease, but they haven’t disappeared. Those fears continue to linger in the minds of traders, but the lack of fresh bearish fodder allows money to slowly creep back into the commodity and equity sectors, knowing that it can quickly reverse again with the next headline. The VIX continues to trade near 21 this morning, while the dollar index is trading lower near 102.5. Yields on 10-year Treasuries are trading 3.55%, while yields on 2-year Treasuries are trading near 4.01%. Crude oil prices traded mixed to higher overnight, while grain and oilseed prices are mixed to higher as well in early trade.

Wall Street seems to accept that pain is an inevitable product of the Federal Reserve’s monetary tightening designed to break inflation’s back. But pain to me is different than pain to my wife. She can tolerate a lot more pain than can I, whereas Wall Street tends to be more like me. We don’t like pain and we want to blame somebody when it occurs. But one principle that I’ve learned in life is that there are “no free lunches.” The greater the lunch – the greater the price to be paid. The past several years of fiscal and monetary stimulus wasn’t just a lunch for America; it was a feast. We gorged ourselves on the trillions of dollars of stimulus, and that stimulus effectively grew the economy into a beast that demanded to be fed – thus the highest inflation in four decades. The Fed’s job is to put the beast back in the cage before it’s too big to fit through the cage door. The larger the beast gets, the harder it is to fit it back into the cage door, and therefore the more pain that must be inflicted.

People don’t like pain. That’s normal. But we liked feasting on the stimulus. Yes, it’s a fair question to debate the speed at which we capture and cage the beast. But keep in mind that the beast continues to grow while it is out of the cage – it continues to have detrimental effects on the long-term health of the economy. You can also debate whether 2% or 3% or whatever is the most appropriate level to land with inflation. But that still doesn’t do away with the need to cage the beast. The Fed’s program for caging the beast exposed problems within some banks that largely went unnoticed when money was cheap – near zero interest rates. The Fed didn’t cause these problems, but it did expose them. Regardless, the Fed can’t afford a collapse of confidence in the banking system in the middle of trying to cage the beast. It must now manage both problems at the same time. Paul Volker took extreme actions to cage the beast four decades ago. He succeeded in doing so, but there was a price to be paid – a heavy price. This Fed is trying to find that middle ground, but it isn’t easy. There will be rough spots, and there will likely be good times. But ultimately, the job needs to get done.

Taiwan’s President Tsai Ing-wen is expected to make stops in New York and in California this week as stopovers on her trip to and from Central America. She’s expected to meet with U.S. House Speaker Kevin McCarthy on her stopover in California, which angers Chinese officials who see it as an attempt by the United States to fuel the independence movement in Taiwan. Simultaneously, the former leader of Taiwan who is more sympathetic to Mainland China started a 12-day trip to the mainland yesterday, where he will visit sites with deep historical, cultural, and political significance. His trip is meant to appeal to that growing sector of Taiwan’s population who simply want peace. That’s the group that China’s Xi Jinping wants to appeal to in his efforts to “reunite” Taiwan to the Mainland. He wants to convince the majority that joining the mainland will foster peace and prosperity, allowing him to quietly take control of the island nation without firing a shot, as he essentially did Hong Kong.

Meanwhile, China continues to aggressively buy corn and soybeans on the recent price break, even though near-term demand is soft due to the sluggish economy and poor feeding margins. China’s soybean crush is only about 1.5 mmt per week. USDA confirmed Thursday that China purchased 2+ million metric tons of U.S. corn in the previous week, and it continues to buy corn on nearly a daily basis. Our cash sources also indicate that China bought another 24 cargoes of Brazilian soybeans last week – mostly for April to July shipment. We can’t confirm it, but the recent pace of corn and soybean purchases seem to confirm our expectations that China would take advantage of lower prices this year to rebuild its reserves for future use. Argentina’s record drought may eventually see soybean losses there offset much of the massive increase in Brazilian production. Lost corn production in Argentina combines with losses in Ukraine to tighten global supplies, with Brazil’s safrinha production at risk due to late planting as well. China is hedging its risks amid rising tensions with the United States. It doesn’t want to be dependent on U.S. commodities down the road if those rising tensions eventually lead to a failure of trade.

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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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Perspective: Mid-Day Commentary for August 5

August 5 – The Dow Jones is ripping higher for yet another session, up safely over 500 points at the time of this writing to carve out another record high; the S&P and NASDAQ are a bit less enthusiastic but the former is still making its own record high, while the latter is less than 500 points off its own top thanks to a strong ongoing week of trade. The dollar is churning lower this morning in an effort to re-test Monday’s 1 ½-month low, while the ten-year note has flipped higher in the mid-morning hours. The CME FedWatch tool interesting has market odds of a quarter-point rate hike next month coming closer to a 50-50 proposition as crude oil prices decline.

Mike CastleWed, 05 Aug 2026, 15:19

Grains & Oilseeds

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