Bobby Coats and Nathan Childs answer questions at Rice Outlook Conference
Bobby Coats, left, University of Arkansas, and Nathan Childs, right, USDA economist, visit with David Jessup, president and CEO of DeWitt Bank and Trust in DeWitt, Ark., at the USA Rice Outlook Conference.

Markets await Trump’s presidential address

Verbal guidance from the Federal Reserve Board is creating market uncertainty ahead of tomorrow night's presidential address.

Market Price Considerations for the Week Beginning February 27, 2017 Slide Show Link: http://www.deltafarmpress.com/corn/market-price-considerations-week-feb-27

  • Markets covered: Rice, Cotton, Soybeans, Corn and Wheat; Select U.S. and Global Equities and Currencies; Oil; and 10-year Treasury Yield

Fed Guidance: Bond, currency, equity and commodity market participants enter the week-of-February 27, 2017 a little anxious given ongoing Fed verbal guidance of the last two weeks. The guidance implied accelerating the removal of their accommodation or raising the Fed Fund Rate “possibly sooner” than the previously expected June 13-14, 2017 Federal Open Market Committee (FOMC) meeting was a real possibility.

Fed Verbal Guidance intentionally or unintentionally has heightened general market risk and uncertainty, especially in commodity markets. At the very least market participants must consider the possibility of a rate increase at the conclusion of the March 14-15 Federal Open Market Committee meeting.

A rate increase would likely be bullish the dollar and supportive of a higher interest rate. All things equal this would likely have a:

  • Negative impact on commodity prices or hard assets in general, and
  • Impede the global reflationary efforts.

President Trump will address a joint session of Congress and the Nation Tuesday night. This will be a time for the president to reinforce and provide an enhanced understanding of his programs and views related to fiscal, monetary, trade and regulatory policy and other issues.

Market participants are especially interested in receiving a thumbs-up related to the ongoing reflation trade. Global bond, currency and commodity markets over the past couple of weeks have lost some of the reflationary wind in their sail. This leaves all wondering is the current market action corrective or is a market trend change underway with more general commodity weakness than strength?

Corrective market action is normal and anticipated, but in a domestic and global economic setting attempting to move away from:

  • Chronic slow growth with dangerously low inflation to an aggressive stimulative reflation economic setting; and from
  • S. Central Bank’s monetary accommodation to managing economic activity in a rising interest rate environment, then
  • Market participants are justifiably concerned about a U.S. and global government and Central Bank misstep, which would serve as a catalyst for renewed market weakness; therefore,
  • Elevated risk management precautions are in order as we enter the week of February 27 2017.

White House, Office of the Secretary: Press Briefing comments by Press Secretary Sean Spicer on February 23, 2017 related to the address by the President before both Houses of Congress.

 

“Next week, of course, the President will give a joint session address before both Houses of Congress.  He’s currently working closely with the speechwriting team on presenting his vision to Congress and the American people.  I’ve got a few updates that I want to just -- as we’re now a few days out. The theme of the address will be the renewal of the American spirit. The address will particularly focus on public safety, including defense, increased border security, taking care of our veterans, and then economic opportunity, including education, job training, healthcare reform, jobs, and tax and regulatory reform.”

PDF Chart Book Index Download at following link to view

Market Price Considerations for Week Beginning February 27, 2017

  • Chart 1. $UST10Y - 10-Year US Treasury Yield, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 2. $UST10Y - 10-Year US Treasury Yield, Daily Chart, May 2016 – Feb. 24. 2017
  • Chart 3. $UST10Y - 10-Year US Treasury Yield, Daily Chart, 2007 – Feb. 24. 2017
  • Chart 4. Power Shares US Dollar Index, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 5. Power Shares US Dollar Index, Daily Chart, July 2016 – Feb. 24. 2017
  • Chart 6. Power Shares US Dollar Index, Monthly Chart, August 2007 – Feb. 24. 2017
  • Chart 7. EURO Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 8. Australian Dollar Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 9. Canadian Dollar Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 10. Japanese Yen Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 11. British Pound Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 12. Dow Jones, Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 13. Dow Transports Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 14. S&P 500 Large Caps Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 15. Nasdaq Composite, Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 16. World less U.S. & Canada Monthly Chart, 2001 – Feb. 24. 2017
  • Chart 17. Emerging Markets Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 18. Australia Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 19. Brazil Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 20. Canada Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 21. China Monthly Chart, 2004 – Feb. 24. 2017
  • Chart 22. Mexico Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 23. Japan Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 24. Russia Monthly Chart, 2007 – Feb. 24. 2017
  • Chart 25. India Monthly Chart, 2007 – Feb. 24. 2017
  • Chart 26. $CRB Reuters/Jefferies CRB Index, Weekly Chart, November 2013 – Feb. 24. 2017
  • Chart 27. $CRB Reuters/Jefferies CRB Index, Daily Chart, July 2016 – Feb. 24. 2017
  • Chart 28. $CRB Reuters/Jefferies CRB Index, Monthly Chart, 2007 – Feb. 24. 2017
  • Chart 29. $WTIC, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 30. $WTIC, Daily Chart, July 2016 – Feb. 24. 2017
  • Chart 31. $WTIC, Monthly Chart, 2007 – Feb. 24. 2017
  • Chart 32. Soybeans, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 33. Soybeans, Daily Chart, July 2016 – Feb. 24. 2017
  • Chart 34. Soybeans, Monthly Chart, 2004 – Feb. 24. 2017
  • Chart 35. Corn, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 36. Corn, Daily Chart, July 2016 –Feb. 24. 2017
  • Chart 37. Corn, Monthly Chart, 2007 – Feb. 24. 2017
  • Chart 38. Rough Rice Mar '17 (ZRF17) CBOT, Quarterly, Continuation Chart, 1987 – Feb. 24. 2017
  • Chart 39. Rough Rice Mar '17 (ZRF17) CBOT, Daily Chart, Feb. 2016 – Feb. 24. 2017
  • Chart 40. Cotton, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 41. Cotton, Daily CharJuly 2016 – Feb. 24. 2017
  • Chart 42. Cotton, Monthly Chart, 1997 – Feb. 24. 2017
  • Chart 43. Wheat, Weekly Chart, 2014 – Feb. 24. 2017
  • Chart 44. Wheat, Daily Chart, July 2016 – Feb. 24. 2017
  • Chart 45. Wheat, Monthly Chart, July 2016 – Feb. 24. 2017

Dr. Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected]

DISCLAIMER-FOR-EDUCATIONAL-PURPOSES

 

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