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Perspective: Morning Commentary for October 1

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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October 1 – Stock futures are pointing to a higher open after a mixed close for the major indexes yesterday in which the Dow Jones closed at its lowest level since mid-June but the Nasdaq and S&P 500 both continue to hold roughly 1% to 2% below their all-time highs. The VIX is modestly higher to start the day, hovering just below 16.5 at the time of writing. The dollar is surging this morning, touching its highest level since April 2025 just below 102 earlier in the session and now hovering around 101.8. Long-term Treasury yields continue to raise concern as they push higher yet again, with 10-year yields rising to 5.317% and 30-year yields to 5.674%, while short-term yields ease following yesterday’s positive economic data potentially taking out some of the most hawkish fears, as the 2-year yield falls to 4.875% at the time of writing. Crude oil prices are in the green to start the day, with nearby WTI up 1% to trade near $91.20 and nearby Brent up 1.7% to trade near $99.70. The ags are pointing to a mixed start as the grains and oilseeds attempt to rebound from yesterday’s sharp selloff.

Chinese refiners have suspended exports for October in an attempt to bolster their own domestic supply, adding additional stress to an already tight global refined product market. We saw China announce a similar restriction back in March before returning more substantially in July, and their exports have played a major role in filling the existing supply gap in the months that followed. In August, the last month of available Chinese customs data, China’s August diesel exports hit a nearly two-and-a-half year high, while their jet fuel exports hit an all-time high. Now, those needed barrels are expected to be removed from the market in the near term. While the biggest barrel impact will likely be on the jet fuel side, the biggest exposure in my opinion remains on diesel.

Sticking with that theme, the U.S. has requested E.U. governments to begin releasing diesel reserves in order to help alleviate some of the front-end supply pressures being seen in the global market. The majority of the E.U.’s emergency diesel stocks are held in France and Germany, with U.S. officials expressing frustration regarding their unwillingness to tap into this supply. Recent public discussions regarding the U.S. considering restrictions on diesel exports makes this conversation much more meaningful, particularly if this could be targeted at specific countries, as is being suggested. European buyers have become much more reliant on U.S. exports amid the ongoing disruption to supply elsewhere, which makes the impact of a potential loss of these barrels more significant. This is still a developing story that we will continue to monitor closely, but as of now it sounds as if many of these member states are expected to hold a meeting today to discuss potential measures. Given the ongoing escalatory rhetoric from Russia towards other European nations, E.U. leaders will be forced to balance the prospect of near-term relief versus the possibility of making themselves more exposed to such threats moving forward, adding additional complexity to the situation.

U.S. employers announced 43.28k job cuts in September, down from 52.88k in August and the lowest total for the month of September since 2022. The tech sector led the way on job cuts yet again at 10.80k, followed by food (7.33k), and services (3.30k). This brings cumulative 2026 cuts to 573.20k, down 39.4% versus the same period last year, continuing to highlight the resilience of the U.S. labor market. Andy Challenger, Chief Revenue Officer of the firm responsible for today’s report, noted: “companies are in a wait-and-see period right now,” pointing to the ongoing geopolitical and economic uncertainty.

First time claims for unemployment came in below expectations again, dropping to 197k in the week ended September 26 from an upwardly revised 198k in the week prior, and 3k below the average analyst estimate. This represents the lowest weekly initial claims since mid-July and pushes the four-week moving average for initial jobless claims down to 200k, marking a seven-week low. Continuing claims fell to 1.701M, sharply below the average analyst estimate of 1.725M and below even the lowest estimate of 1.718M, while the week prior was revised down 7k to now sit at 1.712M. This week’s continuing claims are now their lowest since April 2023, another highlight of the ongoing resilience of the U.S. labor market. Coupled with yesterday's surprisingly strong upward revisions to Q2 U.S. GDP and the Atlanta Fed’s GDPNow continuing to show strength for Q3, the overall health of the U.S. economy and lingering inflation concerns points to the Fed having permission to continue their hiking path moving forward.

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Perspective: Morning Commentary for October 1

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