Perspective: Morning Commentary for April 3

Perspective: Morning Commentary
Arlan Suderman
Chief Commodities Economist


Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst


April 3 – Dow Jones futures are indicating a third straight losing session to start out this week; economic data continues to show a strong economy in the face of elevated interest rates, and equities trade optimism for rate cuts is slowly starting to erode. Fed Chair Powell is set to provide comments at the Stanford Business Forum later this morning. The 10-year Treasury yield is steady today at 4.36%, while the U.S. dollar is slightly lower and steadied out after highs, and the VIX is surging a bit this week and approaching a 15 reading.


MBA Mortgage Applications fell 0.6% on the week ending March 29, similar to a 0.7% decline on the week prior, with home purchases down 0.1% after a 0.2% decline last week, and refinancings matching the previous week’s drop at -1.6%. The average 30-year fixed mortgage rate ticked a couple hundredths lower to 6.91%, off Feb-March highs just over 7% and below last fall’s peak nearing 8%, but still elevated in general over the last year and a half following the Fed’s interest rate hikes. The U.S. housing market remains fairly strong in the face of those higher mortgage rates, with home prices still rising while solid overall demand remains.


Private payrolls showed that U.S. companies added 184,000 jobs in March, compared to expectations for 150k, with February payrolls revised higher from 140k to 155k as well; it was the largest jobs bump since July. The government is expected to show a 214k employment increase in Friday’s Nonfarm Payrolls, down from a surprising 275k reading in February.    


The U.S. Department of Energy is expected to show steady domestic crude oil stocks in this morning’s weekly petroleum status report; inventories would remain fairly mid-range among the last three years for this time frame, after crude builds in seven of the last nine weeks. Regardless, WTI values are on the rise once again today, up around a dollar per barrel as of the time of this writing and at the highest level since late October on a range of geopolitical tensions and a policy of OPEC+ output cuts. The oil cartel is widely expected to reaffirm that plan when they meet today, despite the recent surge in prices.


The grains are shading towards the high side this morning but not convincingly so, correcting just a bit after two losing session so far this week. The bullish USDA data on Thursday clearly wasn’t enough to build momentum in the corn market, looking content in the low $4’s amid an oversupplied domestic and global market. Rains over the next week will aid moisture in the still-dry Plains and corn belt, and that wet pattern looks to wind up just in time for spring planting to kick off in mid-April, with temperature forecasts on the warm side going forward. The market knows that U.S. farmers don’t need a huge window to get a huge amount of corn acres planted in a timely fashion…


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