Perspective: Morning Commentary for November 19

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

November 19 – Stock futures pulled back overnight as geopolitical risks rise in the Black Sea Region, causing money to flow modestly into safe haven assets. The VIX is trading near 17 at this hour, as the dollar index trades near 106.3. Yields on 10-year Treasuries are trading near 4.36% as money flows into the relative safety of government securities, while yields on 2-year Treasuries are trading near 4.25%. Crude oil prices are modestly weaker, while the grain and oilseed markets are mixed, with soybeans falling on favorable Brazil growing conditions, wheat rises on rising war risks in the Black Sea and corn prices are caught between the two.

Ukraine reportedly fired six U.S. made ATACMs missiles at the Bryansk region of Russia following yesterday’s reports that President Biden signed off on the use of U.S. made weaponry deep inside of Russian territory. Russia reported the strikes against its forces, while Ukraine merely acknowledged that missiles had been fired. The strike coincides with Putin’s signing of a revised nuclear doctrine that lowers the bar on the use of nuclear weapons. The document was first announced in September, but it wasn’t signed by Putin until this week. It indicates that an attack using conventional weapons made by any nation that is considered a nuclear power would be considered a joint attack on Russia. It does not indicate specifically that such an attack would trigger a nuclear response, but it does say that a massive aerial attack against Russia could trigger a nuclear response. Wheat prices would likely be up the daily limit, with sharply higher crude oil prices as well, if the market truly believed that we were on the cusp of a nuclear war in the region. In fact, crude oil prices are modestly weaker at this hour. But wheat prices added a bit more war premium again this morning on the chance that we could see this escalation result in tit-for-tat attacks on export infrastructure and/or the ships themselves. Again, the market response has been modest thus far, so fear levels are still relatively low, but it is a possibility that’s on the minds of traders.

Fed fund futures are trading 38% odds this morning that we will not see another rate cut from the Federal Reserve when it meets again next month. That leaves 62% odds that we will see a rate cut, but the above reflects a rapidly changing perception toward Fed monetary policy following Donald Trump’s victory on November 5^th. The market is currently pricing in the possibility of just two more rate cuts by June, which is 4 to 5 fewer cuts than it was pricing in a couple of months ago. As I’ve previously noted, Fed Chair Jerome Powell had his staff work on anticipated policy shift proposals following Trump’s first presidential victory in 2016, which were then presented at the December meeting of that year, including future rate hike proposals. I anticipate that we will again see the Fed discuss possible shifts in policy when it meets on December 17 and 18. I’m not saying that it will propose rate hikes at that meeting, but I do believe that its statements on the 18^th will leave the door open to that possibility. At the very least, we are already seeing Fed officials walk back expectations for additional significant rate cuts. Trump has proposed forming the Department of Government Efficiency run by Elon Musk and Vivek Ramaswamy, with a goal of reducing government spending by 30%. An aggressive Fed rate cut policy at a time of tax cuts and deregulation – as supported by the incoming Trump Administration – would be considered inflationary by the markets if not also accompanied by significant spending cuts to reduce fiscal stimulus currently in the economy. The question then will be, will the Trump Administration be successful at doing what no other administration has done – make massive cuts to government spending?

The People’s Bank of China emphasized “strengthening expectation management” in its third quarter policy report, focusing on maintaining the yuan’s flexibility while mitigating excessive volatility. Read that as, it wants to control movement of the yuan on the global currency market so that it is seen as a strong alternative to the dollar. As such, the PBOC reinstated its counter-cyclical factor in daily yuan fixing to counter sharp currency moves amid the U.S. dollar’s current strength. The PBOC frames its move by saying that it wants to curb speculative selling pressure that could lead the yuan to overshoot its fundamental value, while maintaining the needed flexibility to adjust as needed amid anticipated tariff discussions with Trump 2.0. In other words, it wants to determine the value of its currency, rather than allow the market to do so, and that will not sit well with other countries.

November ’25 soybeans futures posted a bullish key reversal on the charts yesterday, and it meant little to overnight traders, who pushed prices lower again. Brazil is currently on track to harvest another big soybean crop if the current weather pattern holds. On the other hand, wheat prices are building back some war risk premium, as indicated above, with corn prices caught between the two, with pretty solid underlying demand now as harvest wraps up. All of this as we slip into the holiday malaise phase of the markets in the weeks ahead. Fund managers are beginning to put corn in their portfolio, and they may soon add wheat as well.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI . StoneX is a trading name of StoneX Financial Ltd (“SFL”). SFL is registered in England and Wales, Company No. 5616586. SFL is authorized and regulated by the Financial Conduct Authority [FRN 446717] to provide to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorised to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorised & regulated by the Financial Conduct Authority under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorised by the Financial Conduct Authority. StoneX Group Inc. acts as agent for SFL in New York with respect to its payments services business. StoneX APAC Pte. Ltd. acts as agent for SFL in Singapore with respect to its payments services business. ‘StoneX’ is the trade name used by StoneX Group Inc. and all its associated entities and subsidiaries.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2024 StoneX Group Inc. All Rights Reserved.

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.

Market Intelligence

StoneX: We open markets

Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.

Globality

With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency

As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise

From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.

Tell us about yourself. Are you a:

First name

Last name

Company

Country

Province/Region

By submitting this form, you are sending StoneX Group Inc. and its subsidiaries your personal information to be used for marketing purposes. View our Privacy notice to learn more.

First name

Last name

Company

Account number

Account holder name (if different from above)

By submitting this form, you are sending StoneX Group Inc. and its subsidiaries your personal information to be used for marketing purposes. View our Privacy notice to learn more.

Perspective: Morning Commentary for November 19

Discover more insights

Top Third Closing Audio Comments

Perspective: Morning Commentary for November 20

Top Third Opening Audio Comments