Perspective: Morning Commentary for May 11

By: Arlan Suderman, Chief Commodities Economist

Thu, 11 May 2023, 13:31

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

May 11 – Inflation and jobs are again the focus today on Wall Street, where traders have taken this week’s data in stride thus far, with the tech sector hitting eight-month highs yesterday via the Nasdaq. The VIX continues to trade near 18 this morning, reflecting the relative calm on Wall Street. The dollar index firmed to trade near 101.9 as it continues to chop just above long-term chart support areas that lie just below 101. Yields on 10-year Treasuries are trading near 3.36%, while yields on 2-year Treasuries are trading near 3.83% as the inverse slowly narrows. Crude oil prices are more than 1% lower this morning, while the grain and oilseed sector is mostly lower as well.

The producer price index rose just 0.2% month-on-month in April, down from analyst expectations of 0.3%, but also much better than the deflationary contraction of 0.5% in March. The headline PPI rose 2.3% year-on-year in April, down from analyst expectations of 2.5% and below the 2.7% posted the previous month. These are good numbers, suggesting significant easing of inflationary pressures at the wholesale level, which to some extent reflects the general weakness in commodity prices used to produce goods. Core PPI, that excludes the more volatile food and energy sectors, also rose 0.2% month-on-month in April, matching analyst expectations, but above the 0.1% contraction seen in March. The core PPI rose 3.2% year-on-year in April, down from analyst expectations of 3.3% and down from 3.4% the previous year. Again, these are good numbers, although the PPI is less impacted by wage inflation than is the CPI, which involves more labor as products move down the supply chain into the retail sector. Nonetheless, these numbers are a move in the right direction.

First-time claims for unemployment benefits rose to 264K in the week ending May 6, up from 242K the previous week, and well-above analyst expectations of 245K claims. The four-week moving average rose to 245.25K claims. Continuing claims for the week ending April 29 rose 12K 1o 1.813 million, which is still below the four-week moving average of 1.830 million. These are numbers that I’ve been watching for signs of a softening jobs market that would suggest easing wage inflation. The above numbers are not yet where the Fed wants to see them to tame wage inflation, but they are slowly trending in that direction. Are these numbers trending in that direction fast enough to suggest a pivot in policy that would result in rate cuts? Probably not yet, and maybe not yet for the rest of this year, but we’ll see. Recent data suggests that wage inflation remains a significant problem, with more job openings than available workers to fill them, although things have started to soften. The Federal Reserve may pause its rate hikes, but it made it clear that it does not want to error by reducing rates too soon. It would rather error by waiting too long.

Deflation is more of a concern in China currently, as its economy struggles post-Covid. China’s CPI rose just 0.1% year-on-year in April, down from 0.7% in March – yes those are year-on-year numbers. Core CPI rose 0.1% month-on-month in April, and it was up 0.7% year-on-year. A breakdown of the data shows that Chinese consumer spending is not strong enough to support the economy amid sluggish export demand for products. This argues for fiscal stimulus, but it’s difficult for China to be in stimulus mode when much of the rest of the world is in a tightening mode. Like the United States, China has seen stronger demand for services, but demand for goods remains soft. China’s PPI for producer prices minus factories fell 3.6% year-on-year in April, down from a decline of 2.5% in March and the seventh consecutive month for declining prices at the producer level, reflecting soft demand.

Two days of “useful” meetings were held in Istanbul this week to discuss the extension of the Ukraine grain initiative, according to a Turkish government website. Keep in mind that Turkey has always put a positive spin on negotiations; often overstating the chance of something good happening. The parties involved discussed the release of ships that have long been held hostage at Ukrainian ports over the past year plus of the war. They also discussed a possible 60-day extension of the grain initiative. Turkey reports that, “It has been agreed by parties to continue the works, hosted by Turkey, at a technical level, in a four-way format, in order for the grain initiative to continue its activities effectively in the coming period.” That sounds optimistic, but Russia’s actions speak louder than words, and its recent actions suggest that risk remains that we may see shipments shut down. The trade still expects the grain to flow, and it expects USDA to project rising corn and soybean stocks in its new-crop balance sheets in tomorrow’s WASDE crop report. The bigger question in my mind is, how realistic will USDA be in its demand estimates, considering the rapid rise in Brazilian production that is cheaper on the global market due to advantageous currency exchange rates?

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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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