Perspective: Morning Commentary for October 24

By: Arlan Suderman, Chief Commodities Economist

Mon, 24 Oct 2022, 13:36

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

October 24 – Stock futures are poised for a firm opening this morning, as they pulled out of the red overnight following a turn lower in Treasury yields, and the dollar shrugged off apparent intervention by Japan to support the yen. Traders are otherwise digesting the news following the conclusion of the 20^th meeting of the Congress of China’s Communist Party. The VIX traded back above 30 this morning, after Friday’s brief dip below it. The dollar index is trading near 112.3. Yields on 10-year Treasuries are trading near 4.23% this morning, after hitting a new 15-year high near 4.34% on Friday. Yields on 2-year Treasuries are trading near 4.52%. Crude oil prices are modestly lower, along with a broad spectrum of commodities overnight, which is true for the grain and oilseed markets as well, which seemed to rise and fall with the dollar and with Treasury yields overnight, while also reacting negatively to news coming out of China.

The Chicago Fed national activity index for September came in at 0.10 this morning, matching the previous month’s upwardly revised number. This is a key number for the debate over whether we are in a recession, or perhaps in stagflation – defined as a stagnant economy with high inflation. The Chicago Fed national activity index is a weighted average of 85 existing monthly indicators of national economic activity designed to have a value of zero when the economy is growing at a trend rate, with a standard deviation of one. There are no doubt specific sectors of our economy that are in recession currently. But the economy as a whole would not appear to be so. Today’s number indicates that it was growing at a slightly better than trend rate overall over the past two months. That again gives the Federal Reserve the sense that there’s still too much stimulus left in the economy to bring down inflation, meaning that it needs to maintain a hawkish stance to slow inflation.

The 20^th meeting of Congress of the Chinese Communist Party ended this weekend with some drama, designed to send a clear message to the world. President Xi Jinping is in charge, and nobody dare question that. He was re-elected to an unprecedented third 5-year term in office, with no successor indicated to follow him yet at this time, raising speculation that he may also seek a fourth term in 2027. The Politburo Standing Committee is made up of Xi Jinping and six other leaders who form the highest concentration of power within the Party. Xi Jinping’s predecessor previously served on that committee, but he was physically removed from the meeting on State TV at the end of the Congress. In total, four new leaders are now on the Politburo – all loyalists to Xi Jinping. Nobody is expected to question Xi Jinping going forward, or to challenge him if he heads in the wrong direction.

That concerns Wall Street. A leader with absolute power that eliminates any contrary conversation is a reason to have concerns. That is what we currently see in Russia, leading to erratic behavior. Social unrest within China is the highest that it’s been in many years due to the economic problems created by Xi Jinping’s zero-Covid policy, which was reinforced over the past week. Don’t get me wrong. China has firm control over the people of China, and that social unrest is far from a threat to his power currently. But it does suggest that China’s economic problems are far from over, leading to questions about its demand for commodities going forward. That was a factor in the weakness of the commodity markets overnight. The events of the past week also likely move forward both the certainty and the timing of Xi Jinping’s attempts to “reunify” Taiwan to China. One of the new members of the Politburo is the commander of the Eastern Theatre Command, who was a key planner of the blockade that China put in place around Taiwan back in August. That points to the high priority Xi Jinping puts on the Taiwan issue. This too increases the risks for commodities, as any direct conflict could result in lost business with China of the vast volume of commodities – at least a portion of the trade – that we do with the world’s largest importer.

Risks are rising that the trade agreement that allows Ukraine to export grain through three southern ports may not be extended in its current form due to objections by Russia, although we’ll likely see a continued back-and-forth in the rhetoric for several more weeks. Long-range forecasts calling for at least half of Brazil’s soybean belt to turn dry in November continue to move forward in the models, although conditions currently are rather good. But the grain and oilseed markets continue to see significant headwinds from both a strong dollar and from a high VIX. That leaves these markets trading a choppy sideways pattern for now. StoneX is scheduled to release its monthly customer survey yield estimates next week on Wednesday, November 2, which should be the first of several private estimates ahead of USDA’s November 9 crop report estimates.

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Mike CastleThu, 06 Aug 2026, 13:24

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Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Mid-Day Commentary for August 4

August 4 – The Dow Jones is absolutely piling on gains today, adding a similar number that led to yesterday’s record, with the benchmark index now nearing the 54k-point mark through mid-morning. The S&P also hit a new record, while the NASDAQ is exceeding both those gains on a percentage basis. The marketplace is optimistic on a U.S.-Iran trade deal, though the proposed resolution is still being “circulated between the parties”.

Mike CastleTue, 04 Aug 2026, 14:58

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