Perspective: Morning Commentary March 19

By: Arlan Suderman, Chief Commodities Economist

Thu, 19 Mar 2026, 13:30

Guest Commentary by Mike Castle

Lead Market Intelligence Project Manager

March 19 – Stock futures are pointing to a lower open after yesterday's selloff amid ongoing escalations in the Middle East and fears of a more hawkish Fed. In turn, the VIX is adding to yesterday's gains, pushing to its highest level since last Thursday around 27.3 at the time of writing, reflecting that fear. The dollar is giving back some of yesterday's gains, though still strong relative to recent ranges as it trades around the 99.9 mark. Treasuries are firming again, with 10-year yields nearing the recent highs made in mid-January as they hover just below 4.30%, while 2-year yields are in the green again around 3.86% after hitting a high since late July in yesterday’s session. Crude oil is mixed, with nearby WTI off roughly 2% at the time of writing as it trades at $97/barrel, while nearby Brent futures are up over 5% to trade near $113/barrel after reaching a high above $119 earlier in the session in reaction to the fresh strikes on energy infrastructure in the Middle East. The ags are mostly higher to start the day, with new crop soybeans seeing the biggest gains, with a lack of major fundamental news to drive but a potential for increased money flow out of the equities and into commodities providing support.

Initial jobless claims for the week ending March 14 fell to 205k, down from 213k in the week prior and coming in below the low-end analyst estimate of 210k. Continuing claims came in at 1,857k, above the average 1,850k estimate, though last week’s continuing claims were revised down slightly from the 1,850k initially reported to 1,847k. This week’s surprisingly soft initial claims pushed the four-week moving average down to 210.75k, the lowest it’s been since late January. While one week of better-than-expected results is unlikely to quell the broader labor market concerns that we’ll touch on in more depth below, the market should be happy to breathe a sigh of relief wherever it can at this point amid the ongoing largely negative headlines.

As expected, the Fed held rates steady yesterday, as did many of the world’s other prominent central banks (Bank of Canada, Bank of Japan, Bank of England) in their meetings this week. As could also be expected, much of the focus of these central bankers’ comments centered on expected inflation risks stemming from the energy shock in the wake of the ongoing war in the Middle East. Fed Chair Jerome Powell kept a notably cautious tone in his press conference, emphasizing the huge amount of uncertainty the economy faces and stating, “higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy.” The inflation risk is the obvious headline, but both sides of the Fed’s dual mandate face rather significant risks at this point, putting them in a very difficult position. Despite the current unemployment rate of 4.4% remaining relatively low from a historical perspective, there continues to be signs of underlying weakness, with the surprise loss of 92k jobs last month and downward revisions to prior months pointing to relatively shaky footing even prior to this month’s spike in energy prices. That’s the conundrum—a fresh rise in inflationary pressures would necessitate rate hikes, while sustained weakness in the labor market would necessitate rate cuts… In that situation, the most likely path is holding steady, and that’s now the base case being priced in by the market, as CME’s FedWatch now shows the next expected rate cut not coming until September 2027.

Could the Fed’s next move be a rate hike? That’s a question many traders appear to be asking now, with CME’s FedWatch now showing higher odds (9.9%) of a 25-basis point hike at the Fed’s June meeting than a 25-basis point cut (3.5%). A month ago, the odds of a June hike sat at 0%. Personally, I find it difficult to see them reacting that quickly, especially given their lack of consensus and the Fed’s own dot plot pointing to one more cut in 2026 and another in 2027. However, it is worth noting that one official now sees a potential hike in 2027, the first time we’ve seen a shift in the one-direction easing mindset in recent memory. I should emphasize that the Fed’s base case is still for cuts, but in an environment of an already divided Fed and rising uncertainty, it does appear meaningful to see a shift from a mindset of “the next move is definitely down,” something that will certainly be worth keeping a close eye on in the months ahead.

Yesterday’s surprisingly hot PPI reading is likely to help keep the inflation story front of mind, but the impending impact of rising energy prices may not be the only concern. Core PPI rose at 3.9% year-over-year in February, tied for the second-highest print in the last three years. This is a different story than what CPI has been telling, however, with core CPI falling to 2.5% year-over-year in January and holding there in February, the lowest yearly rise seen since March 2021 (though I must point out we’ve held above the Fed’s 2.0% mandate for five years now). That divergence has led the spread between the two to widen for four consecutive months to now sit at 1.4%, its widest since July 2022. In the post-Covid cycle, core CPI has tended to lag PPI, with the strongest correlation being around five months. Obviously, there’s no guarantee this trend continues, but it does present another potential signal of upside pressure in consumer level inflation around the corner. Add in this month’s spike in energy prices and it’s hard to see this story going away any time soon.

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Editorial TeamWed, 10 Jun 2026, 23:01

Grains & Oilseeds

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Arlan SudermanWed, 10 Jun 2026, 13:38

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