Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst
February 5 – Dow Jones futures were set to open lower this morning and certainly did not reverse course after the positive ADP jobs numbers; the ten-year treasury yield ticked lower to 4.46%, with the dollar and crude still under pressure, and the VIX higher this morning but still at relatively subdued levels. The marketplace overall looks fairly content to hold its ground with Trump tariff news thinner heading through mid-week; negotiations with Canada and Mexico are settled for now and the trade doesn’t seem overly concerns with Chinese tariff retaliations. Presidents Trump and Xi did not end up in formal talks yesterday and Trump said he is in “no hurry” to talk to Xi following U.S. 10% tariffs on Chinese imports and China’s targeted retaliation.
MBA mortgage applications rose 2.2% on the week ending January 31, in contrast to a 2.0% decline on the week prior; home purchases fell 3.5% after a 0.4% decline in the previous week, while refinancings bounced 12.2% week-over-week after a 6.8% drop the week prior. The average 30-year fixed mortgage rate in the U.S. dropped across the 7% mark, from 7.02% to 6.97% in this most recent reporting week; it’s been oscillating around that 7% level so far this calendar year, after rebounding from the low sixes as recently as September 2024.
ADP reported that U.S. firms added 183,000 jobs in January, up from the average 150k trade estimate, with December revised sharply higher as well – up from 122k to 176k. That confirms that the labor market is still expanding at a healthy clip, thanks to subdued layoffs and solid wage growth – Fed Chair Powell described the jobs market as “pretty stable” in post-meeting comments last week. Tomorrow’s government employment report is expected to show slightly rising jobless claims and continuing claims for the week ending February 1.
Freed from the threat of Trump tariffs, at least for this month-plus, the grains are generally resuming their rallies with the spot March Chicago corn, soybean, and wheat contracts each posting fresh move highs this morning. Corn remains just shy of that psychological $5/bushel level but the rest of the old-crop contracts look content to trade at that level and try to ration off some demand from a continually-tightening 2024/25 S&D situation. Concerns remain over slow early soybean harvest and second-crop corn planting in Brazil, but when that eventually is resolved, Brazil will be set to produce another massive corn harvest. Additionally, U.S. farmers will be enticed to plant all the $5 corn they can get in the ground this spring if the current corn/soybean price relationship continues through the key March 31 report date and into the spring 2025 U.S. planting season.
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