Walk-Squawk Market Talk

Walk-Squawk Morning Wire

Walk-Squawk — Tue, 01 Sep 2026 11:59:53 GMT

Can Fresh-Month Buying Overcome the Bond Selloff?

September begins with the same cross-asset warning that ended August: bonds are selling off, oil is rising, and equities are struggling to absorb both.

Global sovereign yields have climbed to their highest levels since 2008. The US 10-year Treasury is trading near 4.79%, while the 30-year has moved toward 5.27%. Japan’s 10-year yield reached 3% for the first time since 1996, and long-term borrowing costs in the UK are at their highest levels since the late 1990s. Reuters

At the same time, Brent crude has pushed above $92 per barrel after two additional supertankers were reportedly struck while attempting to exit the Strait of Hormuz.

That leaves stocks dealing with a difficult combination: higher energy costs, higher inflation expectations, and higher discount rates.

The Bond Market Is Sending a Clear Message

The global bond selloff began accelerating after Fed Chair Kevin Warsh’s Jackson Hole speech, where he emphasized that inflation remains too high and reaffirmed the Fed’s commitment to bringing it under control.

Traders are now pricing nearly a 70% probability of a quarter-point Fed hike at the September meeting. Barclays and Société Générale have both added rate increases to their forecasts following Warsh’s remarks.

But this is no longer solely a Fed story.

Markets are reassessing the level of neutral interest rates across the global economy. Persistent inflation, large fiscal deficits, heavy sovereign issuance, and enormous AI-related borrowing requirements are all forcing investors to demand greater compensation for owning long-duration debt.

The Bloomberg global sovereign bond yield reached 3.72%, its highest level since mid-2008. September and October have also historically been the two weakest months for global bonds over the past decade.

Treasury Secretary Scott Bessent’s expanded buyback program briefly reduced pressure on the long end, but the 30-year yield has now nearly returned to the levels that prevailed before the announcement.

The buybacks may improve liquidity and soften dislocations. They do not eliminate the underlying supply, inflation, and fiscal problems.

Hormuz Risk Returns

The energy market is adding another layer of pressure.

Two very large crude carriers, the Sidr and Senegal Prosperity, were reportedly hit by projectiles while attempting to leave the Strait of Hormuz. One vessel was struck by three projectiles, while the other is now anchored near the Omani coast.

The attacks threaten the fragile recovery in Gulf oil shipments, which had returned to approximately half of pre-war levels through covert shuttle movements and alternative loading arrangements.

The US has declared international shipping lanes open after clearing mines from designated routes. Iran continues to dispute that assessment, while commercial vessels are increasingly deactivating their tracking systems during transit.

The oil market is therefore dealing with more than the theoretical possibility of disruption. Tankers are being struck while carrying crude out of the Persian Gulf.

As long as commercial navigation remains dangerous, freight, insurance, and security costs should stay elevated. Even without the complete closure of Hormuz, those expenses can maintain a meaningful geopolitical premium in crude.

Will New-Month Buying Arrive?

The first trading days of a new month can bring fresh retirement contributions, mutual-fund allocations, and systematic rebalancing flows.

That could provide an early bid, particularly after equities began September under pressure and investor positioning remains far from euphoric.

However, fresh-month buying is not automatic, and September’s seasonal demand profile is unusually weak.

Citadel Securities notes that September has historically been the weakest month for retail equity demand on its platform. Retail remains a net buyer, but overall participation has been declining. Retail dip-buying on S&P 500 down days has averaged roughly half its normal monthly level during September.

The corporate bid will also begin fading. More than $1.1 trillion of buyback authorizations moved into an open window during August, providing an important source of demand. That support begins shrinking around September 12 as companies enter blackout periods ahead of third-quarter earnings.

Systematic investors have already rebuilt a meaningful amount of the exposure removed during the July selloff. CTAs, volatility-control funds, and risk-parity strategies still have some buying capacity, but the reservoir is smaller than it was immediately following the July reset.

So yes, fresh-month allocations could create buying during the opening sessions. But the structural equity bid is expected to weaken as September progresses.

The Earnings Tailwind Is Gone

The summer rally was supported by one of the strongest earnings seasons in years.

With 93% of the S&P 500 by market weight having reported, 88% beat earnings estimates by a median of 7%. Second-quarter earnings growth tracked near 33%, the strongest pace outside of post-recession recoveries.

Nvidia completed the reporting cycle with another exceptional quarter, but the largest corporate catalysts are now behind us.

That matters because earnings provided a steady stream of positive surprises during the summer. The calendar now turns back toward macro data, where the potential outcomes are more balanced and the market’s reaction is less predictable.

The question is no longer whether companies can beat reduced estimates. It is whether economic data will confirm enough resilience to justify another Fed hike without pushing yields to levels that damage equity valuations.

Protection Is Cheap

The interesting part of the setup is that markets are entering this macro-heavy period with relatively little downside protection.

The VIX ended August near 14.4, while one-month S&P 500 downside protection fell to its lowest level since December 2024. SPX put skew is near its flattest level of the past year.

Single-stock volatility has collapsed even more aggressively. Across the 15 largest semiconductor companies, average one-month implied volatility fell approximately 40% in only 30 trading sessions.

That creates an important asymmetry.

There may be less room for volatility to compress and support equities, while there is considerably more room for volatility to rise if oil, yields, or economic data surprise in the wrong direction.

Approximately $6.2 trillion of options notional is already scheduled to expire on September 18, with total expirations between now and then approaching $9.6 trillion. As those positions expire or roll, supportive dealer gamma could weaken and remove another stabilizer beneath the market. Citadel Securities

September’s Seasonal Problem

Since 1928, September is the only month in which the S&P 500 has declined more often than it has advanced.

The index has closed lower in approximately 55% of Septembers, with an average monthly return around negative 1.1%. The second half of the month has historically been the weakest two-week period of the year.

Midterm-election years have been even more challenging. September has averaged a 1.5% decline, with weakness typically continuing through month-end before conditions improve in October.

Seasonality is not destiny. It becomes more relevant, however, when it aligns with fading buybacks, weaker retail participation, expensive valuations, rising oil, and a global bond selloff.

Today’s Data

Markets will receive two important reports at 10:00 a.m. ET:

July JOLTS job openings
August ISM Manufacturing

The reports will help determine whether today’s rate selloff continues.

Strong job openings and a firm ISM prices-paid component would reinforce expectations for a September hike and could push yields higher. Softer employment demand or weaker manufacturing activity would reduce some of the pressure, although an inflationary prices-paid reading could leave markets with an uncomfortable stagflation signal.

The official September calendar then moves through ISM Services and jobless claims Thursday, followed by the August employment report Friday. New York Fed calendar

After that, PPI arrives September 10, CPI September 11, and the FOMC decision September 16.

Bottom Line

New-month buying can still arrive, particularly with investors under-positioned and protection inexpensive. A soft JOLTS or ISM report could provide the excuse for yields to retreat and equities to bounce.

But the setup that powered the August recovery is changing.

Earnings are behind us. Systematic exposure has rebuilt. Retail participation historically weakens in September. Corporate buybacks will begin entering blackout. Oil is above $92, tankers are being attacked in Hormuz, and global bond yields are reaching levels not seen in nearly two decades.

The longer-term equity outlook can remain constructive while the near-term risk-reward deteriorates.

The question is not whether some fresh-month buying appears. It is whether that demand is strong enough to absorb a global repricing in rates and another inflationary energy shock.

For now, the bond market remains in control.

EPA Delivers a Better-Than-Feared Outcome for Bean Oil

The EPA has finally released its 2025 small-refinery exemption decisions, ending several days of intense speculation and extreme volatility in soybean oil and RIN markets.

The agency exempted 1.76 billion Renewable Identification Numbers for 29 small refineries. That is close to the upper end of recent market expectations and substantially above the 990 million RINs EPA originally projected when establishing its 2026 and 2027 Renewable Volume Obligations.

However, the most important part of the announcement was not the size of the waivers.

EPA said it will propose reallocating 100% of the difference between its projected and actual 2025 exemption volumes into the 2026 and 2027 mandates before the end of October.

Based on the announced figures:

Actual exemptions: 1.76 billion RINs
Original projection: 990 million RINs
Difference to be reallocated: approximately 770 million RINs

That is a substantially better result for soybean oil, ethanol, and the broader biofuel industry than the market feared Monday morning.

The Decision

EPA ruled on 34 individual refinery petitions:

18 received full exemptions
11 received 50% exemptions
3 were denied
2 were determined to be ineligible

The 29 full and partial approvals account for the 1.76 billion exempted RINs.

EPA said the increase above its original projection reflected a larger number of small refineries seeking relief and changes in their financial circumstances.

The agency also extended the 2025 compliance deadline by 30 days, moving it to October 1. That gives refiners additional time to account for the newly available credits.

Why the Reallocation Matters

The waiver headline is initially bearish for RIN values because exempted refiners no longer need to retire those credits for 2025 compliance.

That immediately increases available RIN supply and reduces near-term compliance pressure.

But the reallocation commitment changes the longer-term demand calculation.

Before the announcement, the market feared EPA would approve as many as 1.8 billion RINs of exemptions while only accounting for the original 990 million-RIN projection. That would have left a hole of approximately 800 million RINs in mandated biofuel demand.

Instead, EPA has committed to proposing full reallocation of the roughly 770 million-RIN difference.

The original projected volume was already incorporated into EPA’s existing framework. The supplemental proposal is designed to account for the unexpected portion above that estimate.

In practical terms, the administration gave refiners near-term relief but intends to shift the displaced obligation into 2026 and 2027.

That preserves much more of the forward biofuel-demand signal than traders expected.

What It Means for Bean Oil

The immediate reaction may remain volatile.

The creation of 1.76 billion exempted RINs can pressure nearby D4 and D6 RIN values, particularly with the 2025 compliance deadline extended by another month. Refiners now have more credits available and more time to meet their obligations.

For soybean oil, however, the 100% reallocation commitment is supportive.

Renewable diesel and biodiesel producers were facing the possibility of losing hundreds of millions of gallons of mandated demand. If the additional 770 million RINs are fully restored through the 2026 and 2027 RVOs, much of that demand is delayed rather than permanently destroyed.

That helps explain why bean oil has been able to stabilize after the initial washout.

The market still needs to know:

How the 770 million RINs will be divided between 2026 and 2027
Whether the additional volumes will include a specific biomass-based diesel component
How quickly EPA can complete the supplemental rule
Whether oil-industry groups challenge the reallocation
How the proposal affects D4 versus D6 RIN demand

Those details will determine how much of the benefit ultimately flows to soybean oil rather than corn-based ethanol or other renewable fuels.

EPA Addresses the Rumor-Driven Volatility

EPA also took the unusual step of criticizing what it called inaccurate and misleading reporting surrounding the exemption process.

The agency said recent reports contributed to significant RIN-market volatility and raised concerns about the potential misuse of material nonpublic information or market manipulation.

EPA said it is working with the Commodity Futures Trading Commission and will expand that coordination to protect the integrity of the RIN market.

That language is notable after soybean oil and RIN values were repeatedly whipsawed by rumors ranging from 1.2 billion to 1.8 billion exemptions, with widely varying assumptions about reallocation.

Bottom Line

The 1.76 billion-RIN waiver package is large and provides significant near-term relief to small refiners.

But the decision is not nearly as bearish for agriculture as the headline suggests.

EPA plans to propose 100% reallocation of the approximately 770 million-RIN difference between its original estimate and the actual exemptions. That means the unexpected demand loss should be transferred into the 2026 and 2027 mandates rather than permanently removed.

Nearby RIN values may remain under pressure as additional credits enter the market, but the forward demand outlook for soybean oil is considerably better than feared.

The next battle is no longer over the size of the 2025 exemptions. It is over how EPA divides and implements the additional 770 million RINs across 2026 and 2027.

EPA announcement

Crop Conditions and Progress

US corn conditions held steady last week, while soybean ratings declined more than expected.

Corn was rated 57% good to excellent, unchanged from the previous week but below 69% last year and the 60% five-year average. State-level results remained highly uneven. Iowa continues to lead at 77% good to excellent, while Nebraska improved 3 points to 58% and Missouri gained 2 points to 68%. Minnesota fell 2 points to 62%, South Dakota dropped 3 points to 39%, and North Dakota slipped 2 points to 24%. Kentucky declined 6 points to 66%.

Crop development is progressing near its normal pace. Sixty-two percent of corn was dented, compared with 56% last year and the five-year average. Thirteen percent was mature, matching the five-year average and just behind 14% last year. Harvest is expanding through the South, reaching 83% in Louisiana, 77% in Mississippi, 65% in Arkansas and Texas, and 14% in Tennessee. Harvest remains negligible across the central Corn Belt.

Soybean conditions fell 2 points to 58% good to excellent, slightly below the 59.4% five-year average and well below 65% last year. The deterioration was concentrated in several important production areas. Minnesota dropped 8 points to 57%, Kansas fell 6 points to 44%, Kentucky declined 9 points to 65%, and Louisiana lost 7 points to 60%. Illinois held at 59%, Iowa remained at 77%, Indiana improved 2 points to 63%, and Nebraska gained 1 point to 65%.

Thirteen percent of soybeans were dropping leaves, ahead of 10% last year and the 9% average. Progress is most advanced in the Delta, with 69% dropping leaves in Louisiana, 63% in Mississippi, and 44% in Arkansas. Soybean harvest reached 34% in Louisiana, 26% in Mississippi, and 16% in Arkansas.

Spring wheat harvest advanced 15 points to 77% complete, ahead of 69% last year and the 68% average. South Dakota was 95% complete, Minnesota 88%, Washington 90%, and North Dakota 75%.

The overall crop report is mildly supportive for soybeans but largely neutral for corn. Corn development is close to normal and ratings were steady, while the soybean decline raises additional questions about late-season yield potential. Forecasts remain broadly favorable for maturation and early harvest, limiting the immediate weather premium.

Cash Market Update

Corn basis was mostly steady Monday after weakening sharply at several processors Friday. Buyers appear increasingly reluctant to follow futures higher as harvest approaches and flat-price bids become more attractive to producers.

Cedar Rapids and Clinton both held nearby and September corn at 28 under. Decatur remained 15 over nearby but 5 under for September and October. Eastern processors continue to offer the strongest bids, including September at 50 over in Hammond and 25 over in Portland. That strength contrasts with softer western locations and reflects tighter regional old-crop availability.

River values were mixed. September corn CIF weakened 4 cents to 89 over September futures, October held near 88 over December, and December slipped 2 cents to 96 over. No corn CIF trades were reported.

Soybean basis showed a pronounced old-crop versus new-crop split. Cedar Rapids strengthened its nearby bid 40 cents to 60 over November futures, but September dropped 23 cents to 40 under. Eagle Grove and Emmetsburg showed similar September weakness. Sioux City held nearby at 100 over, while September and October remained 25 under.

Gulf soybean values firmed modestly. September CIF gained 2 cents to 103 over November, November rose 3 cents to 118 over, and December gained 1 cent to 106 over January. Trades were reported for August, October, and November shipment.

Soybean-product markets remain firm but quiet. Spot meal basis held at 30 under in central Iowa, 35 under in central Minnesota, and 5 over in central Illinois. Cash crush margins remain near $3 per bushel, while crushers appear to own roughly two weeks of soybean coverage before transitioning into new crop.

Soybean-oil basis was steady around 450 over in western Iowa, central Illinois, and the Gulf. Fourth-quarter offers remain scarce because of uncertainty surrounding California regulations and federal biofuel policy.

Freight remains a potential source of localized basis volatility. Late-September Illinois freight is indicated around 875% of tariff, which could limit river movement and create temporary dislocations even as harvest supplies increase.

The cash market is sending a cautious message. Old-crop scarcity still supports select processor and soybean bids, but September and October basis levels are beginning to reflect the approaching harvest. Futures can continue higher, but end users are increasingly using the rally to lower basis rather than raise flat prices.

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Walk-Squawk Morning Wire

Walk-Squawk — Mon, 31 Aug 2026 12:18:14 GMT

Oil, Yields and the Return of the Inflation Trade

Markets begin the week with a distinctly risk-off tone.

Treasury yields are moving higher, crude oil is gaining, and equity futures are under pressure. Nasdaq is leading the weakness as higher long-term rates weigh on technology valuations.

The catalyst is another escalation between the United States and Iran.

American forces struck Iranian positions on Larak Island after reportedly identifying Revolutionary Guard units preparing to deploy additional mines in the Strait of Hormuz. Iran responded with missile and drone attacks directed toward US bases in Jordan, while the United Arab Emirates intercepted an Iranian drone over its territorial waters.

Iranian media also reported that authorities seized a bulk carrier near Bandar Abbas and claimed that an oil supertanker was damaged by mines while attempting to navigate the strait.

Brent crude climbed more than 2% and moved back above $90 per barrel as the market added another geopolitical risk premium.

The Strait Remains the Pressure Point

The Strait of Hormuz previously handled approximately one-fifth of global oil and liquefied natural-gas flows. Although the US military said last week that it had finished clearing mines from designated shipping routes, American allies reportedly remain concerned that sections of the waterway are still dangerous.

That creates a difficult situation for markets.

The US and Iran are not engaged in continuous large-scale fighting, but neither side appears close to a diplomatic breakthrough. Instead, the conflict has settled into an unstable pattern in which several quiet weeks can be interrupted by attacks on military positions, commercial vessels, or energy infrastructure.

Current and former officials on both sides reportedly expect the confrontation to continue for months.

That makes the oil market vulnerable to repeated headline shocks. Even if physical supply is not immediately lost, higher insurance premiums, freight costs, vessel delays, and the threat of additional mining can keep crude prices elevated.

Why Higher Oil and Higher Yields Matter

The combination of rising oil prices and rising Treasury yields is particularly uncomfortable for equities.

Higher energy prices threaten another round of inflation, while higher yields tighten financial conditions and reduce the present value of future corporate earnings. Technology and other long-duration growth stocks are especially sensitive to that combination.

The move also comes directly after a Jackson Hole speech in which Fed Chair Kevin Warsh emphasized that inflation remains too high and continues to be the Fed’s primary concern.

Jackson Hole did not produce a dramatic policy announcement, but it was not entirely a nonevent. Markets have increased the probability of a September rate increase to roughly 60%, while the 10-year Treasury yield finished the session approximately 4 basis points higher.

That was an important signal.

Some investors believed a hawkish Warsh speech could lower long-term yields by strengthening the Fed’s inflation-fighting credibility. Instead, the long end continued to sell off. The 10-year yield is now roughly 25 basis points higher during the quarter.

The bond market appears to be saying that a stronger Fed commitment alone does not eliminate the inflation, fiscal, and Treasury-supply risks embedded in longer maturities.

Nvidia Was Strong, but It Did Not Settle the Market

Nvidia briefly added approximately $450 billion in market value following its earnings report, validating the strength of the AI infrastructure cycle.

Goldman’s new $300 price target would imply a market capitalization near $7.2 trillion over the next year. Whether that valuation is ultimately achieved is less important than what it says about the scale of expectations now embedded in the AI trade.

The broader Magnificent Seven experienced an average post-earnings move of approximately 11% this quarter, the largest realized earnings volatility for the group in a decade.

That reflects both exceptional growth and an increasingly difficult valuation environment. Earnings can remain strong while higher yields make investors less willing to pay steadily expanding multiples.

Technology has spent much of the summer moving sideways despite the enormous individual-stock reactions. The Nasdaq 100 is being squeezed between its longer-term trend, the 100-day moving average, and a shorter-term downtrend.

The range is getting tighter. Nvidia was not enough to produce a decisive breakout, and today’s combination of higher yields and oil is again testing the lower side of that consolidation.

Gold Continues to Send a Different Message

Gold is finishing one of its strongest months in decades, gaining approximately 10%.

The move is notable because it has continued despite rising Treasury yields. Normally, higher real yields create a headwind for non-yielding assets such as gold.

This time, investors appear to be buying gold as protection against currency debasement, persistent inflation, geopolitical instability, and expanding government financing requirements.

Goldman believes the speed of the advance may slow, but the underlying debasement theme is unlikely to disappear. Demand for upside options has increased, with investors favoring call spreads and other structures that benefit from a continued rally.

Gold’s resilience alongside higher yields suggests the market is not simply trading easier monetary policy. It is pricing a broader loss of confidence in the long-term purchasing power of currencies and government debt.

Month-End Could Distort the Tape

Today is the final trading session of August, which introduces the possibility of month-end pension, benchmark, and asset-allocation flows.

It is not calendar quarter-end. The third quarter ends September 30.

Month-end rebalancing can still create sharp moves that have little connection to underlying fundamentals, particularly with liquidity beginning to thin ahead of the Labor Day holiday on September 7.

That means today’s price action may combine three separate forces:

A genuine geopolitical risk premium in crude oil
A hawkish repricing in the Treasury market
Mechanical month-end portfolio flows

Traders should be careful about treating every intraday move as a clean directional signal.

Volatility Is Cheap Again

One of the more interesting developments beneath the surface is the collapse in single-stock implied volatility.

For the first time in roughly four years, three-month forward implied volatility is trading below recently realized volatility. Approximately one-third of the S&P 500 has three-month at-the-money volatility below the fifth percentile of the past six months.

Investors have grown tired of paying for options that continually lose value in a rangebound market. That “long-premium fatigue” has made protection and directional optionality relatively inexpensive just as several catalysts are beginning to converge.

Technology volatility has compressed especially aggressively. If the Nasdaq’s tightening range finally breaks, options may offer a cleaner risk-defined way to participate than chasing futures after the move begins.

Positioning Still Complicates the Bear Case

Despite stocks trading near record levels, investor positioning does not reflect widespread optimism.

AAII bearish sentiment has remained above 40% for three consecutive weeks, even as the VIX trades below 16. Hedge-fund net exposure has also fallen to its lowest level since the April 2025 “Liberation Day” selloff.

Historically, bearish sentiment above 40% combined with a VIX below 20 has been supportive rather than negative. The S&P 500 has averaged a 1.1% gain over the following month and 2.9% over three months, with a positive hit rate around 75%.

That does not make the market immune to a decline. It means a sustained selloff may be difficult when investors are already defensive, index volatility remains subdued, and so many participants are waiting to buy the same correction.

The pain trade could still be higher if this week’s data reduce concerns about another Fed hike.

This Week’s Calendar

The data calendar shifts decisively toward the labor market:

Tuesday: July JOLTS and August ISM Manufacturing at 10:00 a.m. ET
Wednesday: ADP private payrolls, factory orders, and the Federal Reserve’s Beige Book
Thursday: Weekly jobless claims, revised second-quarter productivity and costs, the trade balance, and August ISM Services
Friday: August nonfarm payrolls at 8:30 a.m. ET

The official schedules confirm Tuesday’s JOLTS release, Thursday’s productivity report, and Friday’s Employment Situation report. BLS September calendar ISM Manufacturing is due Tuesday and ISM Services Thursday, both at 10:00 a.m. ET. ISM release calendar

Friday’s employment report is the main event.

July payrolls unexpectedly declined by 23,000, and another negative report would substantially complicate the Fed’s ability to raise rates in September. A meaningful rebound, particularly alongside stronger wage growth, would validate the market’s hawkish repricing.

That leaves the Fed caught between two competing risks: an oil-driven inflation resurgence and a labor market that may be losing momentum.

Bottom Line

The market enters September with several important crosscurrents.

Iran is restoring the geopolitical premium in crude oil. Warsh has reinforced the Fed’s inflation focus. Treasury yields continue to rise, gold is signaling concern about debasement, and technology remains compressed inside an increasingly narrow range.

At the same time, implied volatility is cheap, hedge funds have reduced exposure, and individual investors remain unusually bearish. That positioning makes the downside less straightforward than the morning’s risk-off tape suggests.

Jackson Hole did not settle the policy debate. This week’s labor data may.

A resilient employment report would keep a September hike firmly in play and could push yields higher again. Another weak payroll number would force the market to decide whether softer growth outweighs the inflationary threat coming from $90 crude.

Until then, month-end flows and Middle East headlines may control the tape.

This is meaningfully more bearish for bean oil than the middle-ground scenario discussed Friday.

EPA Waiver Decision Hangs Over Bean Oil

The Trump administration is expected to approve an expanded package of small-refinery exemptions as early as Monday, although the announcement could slip into Tuesday.

The pending waivers are expected to cover more than 1.8 billion Renewable Identification Numbers, nearly double the approximately 990 million RINs incorporated into the EPA’s original assumptions.

The critical detail is that the administration is not expected to automatically reallocate the additional exemptions above that original estimate.

That creates a potentially significant hole in mandated biofuel demand.

EPA’s existing rule reallocated 70% of its projected 2023-2025 exemption volume into the 2026 and 2027 requirements. However, that calculation was based on roughly 990 million RINs. If the final exemption package exceeds 1.8 billion, the incremental 800 million-plus RINs would not be replaced under the current framework.

The administration has discussed reopening the 2027 requirements and adding approximately 500 million or more RINs to offset the larger exemption package. However, that would be a separate regulatory action rather than part of the immediate waiver decision. It would likely require a supplemental proposal and public-comment period.

Therefore, the market cannot treat possible 2027 compensation as guaranteed replacement demand.

Market Implications

The immediate reaction should be bearish for RIN values, soybean oil, renewable diesel margins, and potentially soybean crush margins.

Expanded exemptions allow qualifying refiners to avoid more of their blending obligations. That increases the availability of compliance credits and reduces the immediate incentive to blend ethanol, biodiesel, and renewable diesel.

Biofuel and farm groups estimate that a waiver package exceeding 1.8 billion RINs without sufficient reallocation could eliminate approximately 500 million gallons of biomass-based diesel and renewable diesel demand. Because soybean oil is a major feedstock for those fuels, it carries the most direct agricultural exposure.

The possible 2027 adjustment may limit the longer-term damage, but timing matters. Removing demand now and promising to restore some of it later is not equivalent to maintaining the current obligation.

American Petroleum Institute pressure adds another complication. API has reportedly raised concerns both about the expansion of refinery-specific waivers and the possibility that EPA could offset those waivers by increasing the obligations imposed on larger refiners in 2027.

That leaves the administration caught between three groups:

Small refiners want broad exemptions.
Biofuel producers and farmers want full reallocation.
Larger refiners oppose being forced to absorb the exempted obligations in 2027.

President Trump’s direct involvement means the final package remains subject to change until it is formally announced. Reuters

What to Watch

The headline volume matters, but the details will determine the lasting market reaction:

Total number of RINs exempted
Number of full versus partial waivers
Treatment of Marathon and Chevron facilities
Whether additional volumes receive any immediate reallocation
Size and category of a possible 2027 quota increase
Whether the 2027 addition applies specifically to biomass-based diesel
Timing of any supplemental rule and comment period

D4 RINs should provide the clearest real-time signal for soybean oil, while D6 RINs will offer the better read on ethanol and corn demand. Renewable-fuel producers such as Darling Ingredients and refiners including Calumet, Marathon, Chevron, and Valero may also help show how the equity market interprets the final policy.

Bottom Line

A waiver package above 1.8 billion RINs without immediate reallocation is a bearish near-term outcome for soybean oil.

The prospect of adding 500 million or more RINs to the 2027 mandate could eventually restore part of the lost demand, but that proposal remains separate, uncertain, and delayed.

The market previously rallied on expectations that larger exemptions would be paired with meaningful reallocation. Unless that compensation appears in the announcement, bean oil may need to reprice the immediate loss of mandated demand first and worry about a potential 2027 offset later.

Grain Cash Market Update

The cash market closed the week with a widening divide between nearby processor demand and the pressure created by rising futures, improving crop maturity, and the approaching harvest.

Corn basis weakened sharply at several interior locations Friday. Cedar Rapids fell 18 cents nearby and 20 cents for September, Clinton dropped 33 cents nearby and 23 cents for September, while Clymers weakened 15 cents. Nebraska bids also came under pressure, with Ravenna down 13 to 20 cents and Minden down 22 cents.

The weakness suggests end users were unwilling to follow the futures rally higher, particularly in areas where harvest supplies are approaching. December corn reached new contract highs during the week, allowing processors to reduce basis while maintaining competitive flat-price bids.

Eastern processor bids remain stronger. September corn was quoted at 50 over in Hammond, 35 over at Fort Recovery, and 25 over at Portland. Cloverdale strengthened 8 cents nearby to 50 over, although its September bid fell 40 cents to 5 under.

River basis was comparatively stable. Ohio River corn gained 1 cent nearby and for September. Corn CIF values were steady for November and December but eased 1 cent from January through March.

Soybean basis was mixed. Sioux City strengthened 30 cents nearby to 100 over November, while Incobrasa weakened 10 cents to 30 over. Most other interior soybean bids were unchanged.

Gulf soybean values were defensive. August CIF bids dropped 7 cents to 99 over November, September fell 4 cents to 101 over, and November slipped 1 cent to 115 over. Early Delta harvest and rising futures prices appear to be reducing the urgency of nearby Gulf bids.

Freight remains an important constraint. Illinois and Ohio freight values are expected to rise substantially through September, with late-September Illinois freight quoted at 875% of tariff. Expensive transportation could create localized basis volatility even as national harvest supplies increase.

Soybean Products

The US soybean-product market remained firm but quiet.

Spot soybean meal basis held at 30 under in central Iowa, 35 under in central Minnesota, and 5 over in central Illinois. Gulf meal values were firmer, while crushers appear to own approximately two weeks of soybeans before bridging into new crop.

Cash crush margins remain strong near $3 per bushel.

Soybean-oil basis was steady at 450 over in western Iowa, central Illinois, and the Gulf. Fourth-quarter offers remain scarce because of uncertainty surrounding California regulations and federal biofuel policy.

International soybean-oil markets were less supportive. Brazilian October oil values fell 270 points, while Argentine October values dropped approximately 230 points. Malaysian palm oil gained 74 ringgit Friday on strength in Chinese palm oil and CBOT soybean oil, along with short covering ahead of Malaysia’s long weekend.

Chinese domestic soybean-oil prices finished 70 to 110 yuan higher for the week and pushed 1.2% to 1.9% above their previous 2026 highs. Chinese domestic corn prices were also firmer, although the weekly increases were generally modest.

Argentine farmer selling slowed following the previous day’s surge. Corn sales fell 27% to approximately 308,000 metric tons, wheat declined 36% to 259,000 tons, and soybeans dropped 25% to 251,000 tons.

Commitments of Traders

The August 25 CFTC report confirmed that managed money aggressively expanded its long exposure across grains and oilseeds.

The biggest surprise was corn.

Managed money purchased approximately 126,000 corn contracts during the reporting week, lifting its net long to 376,500 contracts. That was nearly 30,000 contracts longer than traders expected and represents the largest managed-money corn long since April 2022.

Commercial traders moved to a record-sized hedge against that speculative buying, increasing their net short to approximately 677,000 contracts, the largest commercial short since May 2022.

Soybean funds added approximately 46,600 contracts, increasing their net long to 198,300. That was roughly 29,000 contracts longer than expected.

Across the soybean complex:

Soybeans: net long 198,300, up 46,600
Soybean meal: net long 97,000, up 14,000
Soybean oil: net long 88,400, down 9,800
Combined soy complex: net long 383,700, up 50,800

For comparison, managed money was net short approximately 10,000 contracts across the soybean complex during the same week last year.

Wheat positioning also became significantly more bullish.

Chicago wheat funds covered approximately 12,300 shorts but remained net short 14,200 contracts as of Tuesday. Kansas City wheat funds added roughly 9,200 contracts, increasing their net long to 44,100, the largest since May 2022. Minneapolis wheat funds increased their net long to approximately 13,700.

Combined managed-money positioning across the three US wheat markets increased by approximately 23,600 contracts to a net long of 43,600. At this point last year, funds were net short more than 153,000 wheat contracts.

Where Funds May Be Now

The official CFTC report only captures positioning through Tuesday. Desk estimates suggest funds continued buying during the final three sessions of the week.

Estimated Friday positions were approximately:

Corn: net long 438,500
Soybeans: net long 235,300
Soybean meal: net long 116,500
Soybean oil: net long 117,400
Chicago wheat: net long 21,300

If those estimates are close, funds have already flipped Chicago wheat from short to long and added more than 60,000 corn contracts since Tuesday.

What It Means

The COT report confirms that this is no longer primarily a short-covering rally. Managed money has transitioned into substantial outright long exposure.

That supports momentum while geopolitical headlines, Chinese demand, crop concerns, and tightening world wheat logistics remain favorable. However, it also changes the risk profile.

Corn is now heavily crowded on the long side just as southern harvest expands and farmer selling begins to increase near the $5.40 to $5.50 area. Much of the fund position is concentrated in December futures, creating additional spread and liquidation risk as the contract approaches its seasonal roll period.

Soybeans also carry a much larger speculative long, but continued Chinese buying, strong meal exports, disease concerns, and uncertainty surrounding final yields provide more fundamental support.

Wheat remains the market with the clearest geopolitical catalyst. Black Sea shipping disruptions are redirecting demand toward the Baltic, France, India, the United States, and Canada. However, the rapid shift from a massive speculative short last year to an outright long today means wheat will be highly sensitive to any ceasefire or improvement in Black Sea shipping conditions.

Bottom Line

Cash markets are beginning to resist the futures rally. Corn and Gulf soybean basis weakened Friday as buyers refused to chase prices higher and early harvest supplies approached.

At the same time, managed money has built its largest corn long in more than four years, accumulated nearly 200,000 soybean contracts, and flipped the combined wheat position decisively long.

The technical trend remains higher, but speculative length is no longer fuel waiting on the sidelines. It is already in the market.

That leaves grains supported by momentum and geopolitics, but increasingly vulnerable to harvest pressure, weaker basis, or any headline that causes funds to head for the exit at the same time.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Fri, 28 Aug 2026 12:37:19 GMT

J-Hole Becomes the Next Test for Markets

With Nvidia earnings now behind us, markets turn to the final major event of the week: Federal Reserve Chair Kevin Warsh’s Jackson Hole address at 10:00 a.m. ET.

The immediate question is not whether Warsh signals a September rate hike or cut. Most economists expect the Fed to remain on hold through September and potentially through the remainder of the year.

The more important question is whether Warsh can repair the communication problems created during his July press conference and reduce the uncertainty premium that has developed in the Treasury market.

That makes Jackson Hole less about the next policy decision and more about the Fed’s credibility.

Cleaning Up the July Message

Warsh’s July press conference left investors without a clear understanding of the Fed’s reaction function.

He declined to explicitly identify PCE inflation as the central bank’s preferred measure of price stability and did not clearly state that raising the federal funds rate remains the primary tool if tighter policy becomes necessary.

The result was an unusual market reaction.

The two-year Treasury yield barely moved, suggesting little change in expectations for near-term policy. However, the 30-year yield jumped approximately 11 basis points, the yield curve steepened, gold rallied, and the dollar weakened.

That was not a conventional hawkish repricing. It was a rise in the premium investors demanded for inflation, policy, and fiscal uncertainty.

Warsh now has an opportunity to clarify three things:

The Fed remains committed to returning inflation to 2%.
PCE inflation remains the benchmark used to evaluate that goal.
The policy rate will be raised if inflation fails to move sustainably lower.

A clear statement on those points would not necessarily be hawkish. It could actually reduce long-term yields by restoring confidence that the Fed remains willing to act.

Inflation Is Improving, but the Debate Is Not Over

Recent inflation reports have come in softer, reducing the immediate pressure for tighter policy.

Goldman expects August core CPI and PCE inflation to rise approximately 0.2%, which would mark a third consecutive month of better inflation readings. Methodological revisions scheduled for September 30 could also reduce year-over-year core PCE inflation by at least two-tenths of a percentage point.

That supports the argument that the largest inflationary effects from tariffs, the oil shock, and AI-related demand may be passing.

However, inflation has remained above target for six consecutive years, and the July FOMC meeting produced three dissents in favor of raising rates. The Committee is clearly divided between officials who believe inflation will gradually dissipate and those who believe another tightening cycle may be necessary.

Warsh is unlikely to resolve that disagreement today, but he could describe the conditions that would move the Fed from one scenario to the other.

Markets want to know what combination of inflation, labor-market resilience, economic growth, and financial conditions would be enough to justify higher rates.

The AI Contradiction

Artificial intelligence could feature prominently in Warsh’s speech, particularly following Nvidia’s exceptionally strong earnings and long-term outlook.

Warsh has previously argued that AI will become a significant disinflationary force by increasing productivity and strengthening American competitiveness. From that perspective, stronger economic growth would not automatically require tighter monetary policy if productivity is expanding alongside demand.

But the near-term picture is more complicated.

AI investment is currently increasing demand for semiconductors, memory, energy, data centers, labor, and financing. Hyperscaler capital expenditures are becoming a major source of US economic growth, while memory shortages and infrastructure constraints are placing upward pressure on prices.

AI may ultimately be disinflationary through productivity. During the buildout phase, however, it can still be inflationary through extraordinary capital demand.

Warsh will have to explain how the Fed separates those short-term pressures from AI’s longer-term productivity benefits.

Why the Long End Matters

The greatest market sensitivity may be in the 10-year and 30-year Treasury markets.

Long-term inflation compensation has risen since the July meeting, while some measures of financial conditions have simultaneously become the most accommodative in years. That creates a difficult policy signal.

Higher long-term yields could represent healthy tightening that helps slow inflation. Alternatively, they could reflect an unwanted uncertainty premium caused by unclear Fed communication, large Treasury funding requirements, and concerns about fiscal dominance.

Treasury Secretary Scott Bessent’s expanded long-end buyback plan has provided some support to the bond market, but it does not eliminate the underlying supply problem created by large federal deficits.

If Warsh restores confidence in the Fed’s commitment to price stability, part of the term premium could decline. If he repeats July’s ambiguity, long-term yields could rise further even without an increase in expectations for the policy rate.

The Market Scenarios

Investor expectations are relatively subdued. Bank of America’s latest fund-manager survey found that 53% expect a neutral speech, 31% expect a hawkish message, and only 7% expect Warsh to sound dovish.

That positioning creates three broad outcomes.

Neutral

Warsh acknowledges the recent improvement in inflation, reiterates the 2% target, discusses productivity and AI, but avoids providing direct guidance about September.

This is the consensus outcome and would likely produce a limited initial market reaction.

Constructively Hawkish

Warsh explicitly states that the Fed is prepared to raise rates if core PCE inflation fails to decline, while clarifying that recent long-end volatility partly reflects an undesirable uncertainty premium.

This could initially pressure equities but may ultimately flatten the yield curve. Front-end yields and the dollar would likely rise, while gold, commodities, and crypto could weaken.

Communication Miss

Warsh emphasizes task forces, financial innovation, and long-term structural questions without clarifying the Fed’s inflation framework or willingness to use interest rates.

That would likely reinforce concerns about the Fed’s reaction function. The curve could steepen further, with long-term yields and gold rising while the dollar remains under pressure.

Bottom Line

Warsh does not need to promise a rate increase or provide explicit September guidance.

He needs to convince the market that limited forward guidance does not mean limited willingness to act.

A simple commitment to the 2% PCE inflation target, combined with a clear statement that the Fed will raise rates if inflation remains persistently elevated, could be enough to reduce some of the uncertainty premium embedded in long-term Treasuries.

Nvidia confirmed that the AI investment cycle remains exceptionally strong. Jackson Hole now determines whether markets view that strength as a productivity-driven expansion the Fed can tolerate or another source of inflation that may eventually require tighter policy.

The biggest risk today is not necessarily a hawkish speech. It is another speech that leaves investors unsure what the Fed would actually do.

Bean Oil Rallies on EPA Reallocation Talk

Soybean oil is rallying on a shift in expectations surrounding the EPA’s pending small-refinery exemption decisions.

There has still been no formal EPA announcement. The move is being driven by reports and trade speculation that the White House may pair larger-than-expected refinery exemptions with additional biofuel requirements in 2027.

President Trump reportedly met Wednesday with the EPA, Energy Department, and Agriculture Department to discuss the 34 pending exemption applications. The administration is trying to provide relief to small refiners without delivering a major demand hit to ethanol, biodiesel, and renewable diesel producers.

What the Market Is Pricing

The range of possible exemption relief has moved considerably:

EPA’s earlier baseline was approximately 990 million RINs.
Last week, the market was generally discussing 1.2 billion RINs.
Monday’s bearish rumor suggested exemptions could reach 1.8 billion.
Current trade chatter appears centered around a 1.4 to 1.5 billion-RIN compromise.

The 1.8 billion figure initially pressured soybean oil and RIN values because larger exemptions allow small refiners to avoid more blending obligations. That potentially reduces demand for renewable diesel, biodiesel, soybean oil, and other biofuel feedstocks.

The tone changed after reports that Trump wants more reallocation if the administration approves a larger exemption package.

The administration is now reportedly considering adding approximately 500 million gallons to the 2027 biofuel quotas to compensate for business lost through the upcoming exemptions. No final decision has been made. Reuters

Why Reallocation Changes the Bean-Oil Math

The exemption headline alone is bearish. The reallocation percentage determines whether it stays bearish.

A simplified version of the possibilities looks like this:

EPA’s March rule already included 70% reallocation of qualifying exemptions granted for the 2023-2025 compliance years. The latest debate concerns whether the administration will supplement the 2027 requirement further if the remaining 2025 exemptions exceed EPA’s original assumptions. EPA final 2026-2027 RFS rule

That explains yesterday’s rally and why its still holding gains. The market is moving away from the worst-case interpretation of “1.8 billion RINs with insufficient replacement demand” and toward a compromise in which additional 2027 obligations preserve a substantial portion of the biofuel demand.

Why Bean Oil Is So Sensitive

Renewable diesel and biodiesel represent a major source of incremental soybean-oil demand. When refiners receive exemptions, fewer RINs are required and the economic incentive to blend renewable fuels weakens.

Biofuel groups estimate that a 1.8 billion-RIN exemption package without sufficient reallocation could eliminate roughly 500 million gallons of biomass-based diesel and renewable diesel demand and cost soybean producers approximately $1 billion.

Conversely, adding 500 million gallons to the 2027 quotas could restore much of that demand signal. It would not necessarily create immediate physical soybean-oil consumption, but it would tighten the expected 2027 feedstock balance and improve forward renewable-diesel economics.

What to Watch

This remains a headline-driven market, and several details are unresolved:

The final volume of approved exemptions
Whether every pending application is approved
The percentage of lost demand that will be reallocated
Whether the additional obligation goes entirely into 2027
The breakdown between conventional and biomass-based diesel requirements
How quickly a supplemental rule can be completed

Any new reallocation proposal would require a public-comment period, likely keeping uncertainty elevated even after the exemption decisions are announced.

DAR and CLMT can provide a useful market read because both have direct exposure to renewable-fuel economics. RIN values, particularly D4 biomass-based diesel credits, are an even cleaner indication of whether the physical biofuel market views the headlines as genuinely supportive.

Bottom Line

The bean-oil rally is not being driven by confirmed EPA policy yet. It is being driven by the possibility that the administration will compensate the biofuel industry for larger refinery exemptions by adding roughly 500 million gallons to the 2027 mandate.

The headline number on SREs matters, but the reallocation details matter more.

If exemptions settle near 1.4 to 1.5 billion RINs with meaningful 2027 compensation, the outcome would be considerably better for soybean oil than the 1.8 billion, limited-reallocation scenario feared earlier this week. Until EPA provides the final numbers, however, bean oil will remain vulnerable to sharp reversals on every new headline.

Jackson Hole Becomes the Next Test for Markets

With Nvidia earnings now behind us, markets turn to the final major event of the week: Federal Reserve Chair Kevin Warsh’s Jackson Hole address at 10:00 a.m. ET.

The immediate question is not whether Warsh signals a September rate hike or cut. Most economists expect the Fed to remain on hold through September and potentially through the remainder of the year.

That makes Jackson Hole less about the next policy decision and more about the Fed’s credibility.

Cleaning Up the July Message

Warsh’s July press conference left investors without a clear understanding of the Fed’s reaction function.

The result was an unusual market reaction.

That was not a conventional hawkish repricing. It was a rise in the premium investors demanded for inflation, policy, and fiscal uncertainty.

Warsh now has an opportunity to clarify three things:

The Fed remains committed to returning inflation to 2%.
PCE inflation remains the benchmark used to evaluate that goal.
The policy rate will be raised if inflation fails to move sustainably lower.

A clear statement on those points would not necessarily be hawkish. It could actually reduce long-term yields by restoring confidence that the Fed remains willing to act.

Inflation Is Improving, but the Debate Is Not Over

Recent inflation reports have come in softer, reducing the immediate pressure for tighter policy.

That supports the argument that the largest inflationary effects from tariffs, the oil shock, and AI-related demand may be passing.

Warsh is unlikely to resolve that disagreement today, but he could describe the conditions that would move the Fed from one scenario to the other.

Markets want to know what combination of inflation, labor-market resilience, economic growth, and financial conditions would be enough to justify higher rates.

The AI Contradiction

Artificial intelligence could feature prominently in Warsh’s speech, particularly following Nvidia’s exceptionally strong earnings and long-term outlook.

But the near-term picture is more complicated.

AI may ultimately be disinflationary through productivity. During the buildout phase, however, it can still be inflationary through extraordinary capital demand.

Warsh will have to explain how the Fed separates those short-term pressures from AI’s longer-term productivity benefits.

Why the Long End Matters

The greatest market sensitivity may be in the 10-year and 30-year Treasury markets.

The Market Scenarios

That positioning creates three broad outcomes.

Neutral

Warsh acknowledges the recent improvement in inflation, reiterates the 2% target, discusses productivity and AI, but avoids providing direct guidance about September.

This is the consensus outcome and would likely produce a limited initial market reaction.

Constructively Hawkish

This could initially pressure equities but may ultimately flatten the yield curve. Front-end yields and the dollar would likely rise, while gold, commodities, and crypto could weaken.

Communication Miss

Warsh emphasizes task forces, financial innovation, and long-term structural questions without clarifying the Fed’s inflation framework or willingness to use interest rates.

That would likely reinforce concerns about the Fed’s reaction function. The curve could steepen further, with long-term yields and gold rising while the dollar remains under pressure.

Bottom Line

Warsh does not need to promise a rate increase or provide explicit September guidance.

He needs to convince the market that limited forward guidance does not mean limited willingness to act.

The biggest risk today is not necessarily a hawkish speech. It is another speech that leaves investors unsure what the Fed would actually do.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Thu, 27 Aug 2026 12:11:28 GMT

Nvidia Delivers, but Jackson Hole Still Looms

Nvidia gave the market what it needed Wednesday night.

The company delivered another strong quarter, issued an unexpectedly bullish long-term outlook, and reinforced the idea that the artificial-intelligence infrastructure boom still has room to run. Nvidia shares jumped more than 6% in premarket trading, lifting Nasdaq 100 futures roughly 1.1% and pulling the broader technology sector higher.

But while the report helped quiet immediate concerns about an AI spending slowdown, it did not eliminate the deeper questions surrounding the sustainability and financing of the buildout. It also does not remove the next major macro risk: Federal Reserve Chair Kevin Warsh’s first major policy speech at Jackson Hole.

Nvidia Keeps the AI Trade Alive

The headline numbers were unquestionably strong.

Nvidia’s second-quarter revenue more than doubled from a year earlier to $96.2 billion, beating the $92.5 billion consensus estimate. Adjusted earnings came in at $2.22 per share, ahead of the $2.09 expected.

More importantly, data-center revenue reached $89 billion, topping expectations of roughly $85.8 billion. That is the clearest indication that spending from hyperscalers such as Amazon, Microsoft, Alphabet, Meta, and Oracle continues to accelerate.

For the current quarter, Nvidia guided revenue to approximately $108 billion, compared with Wall Street’s $105.2 billion estimate.

The real catalyst, however, came during the conference call.

Management took the unusual step of looking beyond the current fiscal year and said revenue could grow approximately 70% in fiscal 2028. Analysts had been expecting growth closer to 45%.

CFO Colette Kress said the company would grow even faster if it had access to more supply, adding that customer forecasts point toward Nvidia’s growth potentially doubling next year.

That is an important distinction. Nvidia is not currently describing demand as the constraint. It is still describing supply as the constraint.

Jensen Huang reinforced that message, saying the AI infrastructure buildout remains “at full steam.” He argued that the transition from human-directed AI toward autonomous AI agents could dramatically increase computing requirements. Depending on the task, an AI agent may require 15 to 100 times more compute than a human directly interacting with a model.

In other words, the central Nvidia thesis remains intact: more capable models, greater inference demand, and increasingly autonomous AI systems will require substantially more computing infrastructure.

The Strong Report Still Comes With Caveats

The quarter was impressive, but investors are no longer evaluating Nvidia solely on revenue growth.

Gross margins are expected to decline from roughly 74% in the current quarter to between 71% and 72% by the fiscal fourth quarter. Memory shortages are pushing component costs higher, forcing Nvidia to raise prices. Management expects margins to eventually stabilize between 72% and 73% in fiscal 2028.

There is also a widening gap between reported profits and operating cash flow.

Nvidia produced approximately $56 billion in net income during the quarter but only $24 billion in operating cash flow. Accounts receivable increased to $63.1 billion from $38.5 billion at the end of January, reflecting products that Nvidia has sold but has not yet been paid for.

Five large customers, presumably the major hyperscalers, account for roughly 70% of those receivables.

Those customers are among the strongest companies in the world, so this is not necessarily an immediate credit problem. But it highlights how concentrated the AI spending cycle has become.

Nvidia Is Becoming the Bank of AI

The larger concern is that Nvidia is no longer simply supplying the AI boom. It is increasingly helping finance it.

The company disclosed approximately $530.5 billion in forward commitments, guarantees, supply agreements, and infrastructure support extending beyond 2032. That includes:

$279 billion in commitments to secure memory capacity
$56 billion supporting neocloud companies seeking land, power, and data-center capacity
$108.5 billion in guarantees supporting data-center construction and financing

Nvidia is also working with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR on platforms designed to mobilize more than $500 billion in third-party capital for AI infrastructure.

These arrangements could help unlock another wave of construction, but they also invite comparisons to vendor financing during the dot-com era. The concern is that Nvidia may be using its balance sheet to help customers finance the infrastructure required to purchase more Nvidia products.

Morgan Stanley remains constructive on Nvidia’s fundamental strength but has taken a neutral view of its credit. The bank estimates the company could carry approximately $200 billion of broader credit exposure by the end of 2028 after accounting for leases, guarantees, residual-value support, and other contingent obligations.

Nvidia appears financially capable of absorbing that exposure. The issue is transparency. Many of the arrangements remain early-stage, exist outside conventional debt measures, or may eventually be routed through special-purpose vehicles and private financing structures.

Equity investors can celebrate the growth. Credit investors are still asking who ultimately carries the risk if AI demand fails to meet today’s extraordinary expectations.

Jackson Hole Is the Next Wild Card

Nvidia has given the market a fundamental reason to resume the AI trade, but it may also strengthen the case for restrictive monetary policy.

Technology investment has become one of the largest drivers of US economic growth. If hyperscaler capital spending is headed toward $800 billion this year and potentially $1.3 trillion next year, the economy may prove more resilient than the Fed expects.

That creates an uncomfortable dynamic for the market.

The stronger the AI investment cycle becomes, the less urgency the Fed may feel to ease policy. Treasury yields moved slightly higher following Nvidia’s report, with the 10-year yield returning to roughly 4.67%. That suggests the bond market is not interpreting Nvidia’s results as an entirely risk-free positive.

Fed Chair Kevin Warsh’s Jackson Hole speech is therefore the next potential source of volatility. Investors will be listening for whether he emphasizes persistent inflation and strong investment-driven growth or opens the door to an eventual shift toward easier policy.

The market entered Nvidia earnings with visible trepidation. The results cleared one important hurdle, but Jackson Hole could quickly shift the conversation from earnings growth back toward interest rates and valuation.

Bottom Line

Nvidia’s report confirms that the AI infrastructure cycle is not slowing yet. Demand remains exceptionally strong, supply remains constrained, and management sees growth extending well into 2028.

That is enough to support technology stocks in the near term.

But the report also revealed rising costs, greater customer concentration, softer cash conversion, and an increasingly complicated web of financing commitments. Nvidia is becoming both the primary supplier and one of the principal financial backers of the AI ecosystem.

The market can celebrate the earnings this morning. It just may not be ready to trade with complete conviction until Jackson Hole is out of the way.

How Many Bullish Dominoes Can Fall for Grain?

Grain markets received another geopolitical boost Wednesday afternoon after reports that Vladimir Putin is preparing to escalate Russia’s war against Ukraine, having concluded that peace negotiations are going nowhere.

Wheat understandably led the move. Chicago wheat jumped 6.4% Wednesday and extended the rally overnight, briefly reaching its highest level since July 2023. Wheat prices have now gained roughly 19% this month as the market builds a larger Black Sea risk premium.

Corn and soybeans also benefited Wednesday, but they are struggling to extend the move this morning. Corn and beans are modestly lower, while wheat continues to hold in positive territory.

That distinction matters. This remains primarily a wheat and Black Sea logistics story. For it to develop into a broader and more durable grain rally, several additional bullish dominoes may need to fall.

The First Domino: Escalation

Russia is reportedly considering intensified attacks on Ukrainian infrastructure after deciding that peace talks have reached a dead end.

The concern is not simply that the war continues. It is that the target set could shift more aggressively toward ports, grain terminals, rail lines, energy infrastructure, and other assets required to move agricultural products.

Russia and Ukraine together account for more than one-quarter of global wheat exports. They also supply meaningful quantities of corn, barley, and sunflower oil.

That makes escalation in the Black Sea a legitimate global supply risk.

Ukraine’s agricultural exports are already expected to fall by more than half from previous estimates this season. Russian wheat exports during August are projected to decline by more than 50% from last year as attacks and logistical problems disrupt shipments.

The market is therefore adding risk premium before it knows exactly how much grain will ultimately become unavailable.

The Second Domino: Shipping Becomes More Difficult

The next question is whether escalation produces a lasting disruption to Black Sea shipping.

That could come through:

Additional damage to export terminals
Reduced vessel availability
Higher marine insurance premiums
Shipowners refusing to enter the region
Longer loading delays
More expensive freight and security costs

This is where the story could become more than a temporary headline rally.

If grain remains physically available but cannot move efficiently, global buyers will have to replace Black Sea supplies with wheat from Australia, Argentina, the European Union, Canada, or the United States. Those alternatives generally carry higher freight or procurement costs for traditional Black Sea customers in North Africa, the Middle East, and Asia.

The real bullish confirmation would be importers beginning to pay up for replacement supplies.

The Third Domino: Importers Panic

So far, the rally reflects concern about future availability. The next stage would be visible demand entering the international cash market.

Large buyers may begin extending coverage, increasing tender activity, or purchasing grain further ahead than usual. Importers that normally rely on inexpensive Russian and Ukrainian wheat cannot wait indefinitely for the shipping situation to improve.

If buyers begin aggressively securing Australian, Argentine, European, or US wheat, the Black Sea rally starts spreading into the broader global balance sheet.

That would be a much stronger bullish signal than futures moving higher on geopolitical headlines alone.

The Fourth Domino: Funds Continue Covering Shorts

Wheat spent years weighed down by abundant global supplies and heavy speculative short positioning. That left the market vulnerable to a sharp reversal once the Black Sea situation changed.

The initial rally can therefore feed on itself.

Higher prices force short funds to cover. Short covering pushes prices through technical resistance. That attracts momentum traders and additional algorithmic buying.

The important question is whether the move eventually transitions from short covering into genuine new long exposure. Short covering can produce a violent rally, but it cannot sustain one indefinitely without tightening physical fundamentals.

What Does This Mean for Corn?

Corn has a legitimate connection to the Black Sea story, but the transmission is weaker than it is for wheat.

Ukraine remains an important corn exporter, so further disruption could redirect demand toward the United States, Brazil, or Argentina. Higher wheat prices could also improve corn’s competitiveness in global feed rations.

However, corn still has to contend with its own supply outlook. The market will need evidence of stronger export demand, continued deterioration in US crop conditions, or lower production expectations before it can fully participate in the wheat rally.

Wednesday’s 2.5% corn gain showed that traders are willing to add some geopolitical premium. The inability to extend those gains this morning shows they are not yet convinced the Black Sea story materially tightens the corn balance sheet.

Soybeans Need Their Own Catalyst

Soybeans are even further removed from the immediate conflict.

The most direct connection is through sunflower oil. Russia and Ukraine are major sunflower oil exporters, so disruptions could lift competing vegetable-oil markets, including soybean oil.

Higher energy prices could provide another layer of support through biofuel demand and production costs. Fertilizer supply disruptions or higher freight costs would also raise the cost of future crop production.

Still, soybeans probably need a separate bullish catalyst involving Chinese demand, US crop conditions, South American weather, or biofuel policy before they can turn a wheat-led geopolitical rally into a sustained move of their own.

The Bullish Dominoes

For this to become a broader grain-market event, the progression would likely look something like this:

Russia intensifies attacks on Ukrainian infrastructure.
Port and shipping disruptions worsen.
Freight and insurance costs rise.
Importers scramble for replacement supplies.
Global wheat cash prices strengthen.
Fund short covering accelerates.
Feed demand begins shifting toward corn.
Vegetable-oil disruptions provide support to soybean oil.
Weather or crop problems tighten the US supply outlook.
Higher energy and fertilizer costs raise concerns about future production.

Several of those dominoes are already wobbling, but they have not all fallen.

Bottom Line

The Black Sea escalation is a legitimate bullish development, particularly for wheat. The region’s importance to global exports means the market cannot ignore threats to ports, infrastructure, and shipping access.

But wheat is currently doing most of the work.

Corn and soybeans received a sympathetic lift Wednesday, yet their modest weakness this morning shows the market still wants confirmation that Black Sea disruptions will redirect meaningful demand or tighten their individual balance sheets.

The risk premium can continue expanding, especially if attacks intensify. For the rally to become durable across the entire grain complex, however, geopolitics must begin changing physical trade flows.

Right now, the market is pricing the possibility. The next bullish domino would be evidence that global buyers are actually being forced to change where they purchase their grain.

Cash Market Update

The US cash market remains mixed, with nearby demand still offering support in select processing markets while new-crop basis reflects the approaching harvest.

Corn basis was mostly steady across the interior. Eastern processors continue to post the strongest bids, including September basis of +50U at Hammond, +40U at Portland and Greenville, and +35U at Cloverdale and Fort Recovery. Western bids remain softer, generally ranging from 5 under to 15 under September futures across Nebraska and parts of Iowa.

River movement improved modestly. August corn CIF bids gained 7 cents to +80U, while November through January bids firmed 1 to 3 cents. Illinois River basis gained 3 cents nearby and 5 cents for September. Freight remains elevated into harvest, with Illinois and Ohio values rising sharply through September and October.

Soybean basis was uneven. Nearby bids strengthened at Cedar Rapids, Manning, Sheldon, Morristown, and Claypool, but weakened at Decatur, Incobrasa, and Cairo. August soybean CIF bids slipped 3 cents to +105X, while October improved 2 cents to +108X. February and March bids gained 5 cents to +95H.

The soybean product market was quiet. Spot meal basis remained steady at 30 under in central Iowa, 35 under in central Minnesota, and 5 over in central Illinois. Gulf meal offers were firmer, while interior crushers appear to own roughly two weeks of soybeans before bridging into the new crop. Cash crush margins remain historically strong near $3, although board crush margins continue to retreat.

Soybean oil basis was steady at roughly 450 over in the Gulf and interior. Fourth-quarter offers remain difficult to find because of uncertainty surrounding California regulations.

South American soybean trade was active in Brazil, with September beans reported near +163X and October around +161X to +167X. Nearby Brazilian premiums eased while forward positions were mixed. Brazilian meal was rumored traded for October, but soybean oil and corn markets were mostly quiet.

Argentine farmer selling slowed in corn but accelerated in wheat. Farmers sold approximately 405,000 metric tons of corn Tuesday, down 6% from Monday, while wheat sales increased 55% to nearly 116,000 tons. Soybean selling was little changed at approximately 287,000 tons.

China was notably absent from the report’s physical cash discussion, but USDA announced another 333,000 metric tons of new-crop soybeans sold to China. That adds to the recent string of Chinese purchases and keeps the export-demand side supportive for soybeans.

Weather Outlook

The US forecast remains mostly favorable and does not present a major national production threat.

Regular rounds of rain are expected across the Midwest during the next two weeks, with the northern and northwestern Corn Belt receiving the greatest coverage. The Dakotas, Minnesota, Wisconsin, and portions of Iowa should see multiple opportunities for precipitation.

Those rains will benefit late-filling soybeans and some corn, potentially producing small yield improvements. However, the moisture is arriving too late to create a meaningful increase in overall corn production.

The southern and eastern Midwest will be drier. Southern Illinois, western Kentucky, Indiana, and Ohio should experience enough net drying to improve crop maturation and reduce concerns about early harvest delays. This is particularly helpful in locations that have already received excessive moisture.

Approximately half of the Midwest is expected to receive up to one-half inch of rain from Friday through Sunday, with pockets of 0.50 to 1.50 inches from the eastern Dakotas into Wisconsin. Another system early next week should favor the southwestern Corn Belt through the Great Lakes, followed by more widespread rainfall around September 2-6.

Temperatures will generally remain near to above normal. Highs will mostly reach the 80s and lower 90s, with occasional middle-90s readings across southwestern and south-central areas. There is no widespread heat dome or early frost threat in the forecast.

In the Delta and Southeast, showers will briefly interrupt fieldwork and help some immature crops. However, much of the corn and soybean crop is too advanced for the rain to materially improve yields. A drier pattern should return and allow harvest activity to accelerate.

Brazil’s weather is broadly favorable for harvesting safrinha corn, winter wheat, and cotton. Scattered rain may occasionally interrupt fieldwork, but prolonged delays are not expected. Forecast confidence declines in the 11-to-15-day period, with some models favoring a drier outlook for center-west Brazil ahead of soybean planting.

Argentina should experience more sunshine than rain during the next two weeks, allowing fieldwork to advance. Most winter wheat areas have adequate soil moisture, but west-central and northwestern production areas still need more meaningful rainfall. Scattered showers are expected, although coverage may remain insufficient.

Bottom Line

The cash market is not showing broad scarcity, but select processor bids, improving corn CIF values, strong soybean crush margins, and renewed Chinese soybean buying are providing underlying support.

Weather remains mostly neutral to slightly bearish for US crops. Northern rains may still help soybean filling, while southern drying favors maturation and harvest. The clearer weather concern is Argentina’s drier western wheat belt, though it is not yet severe enough to materially alter the global balance sheet.

For now, geopolitics remains the dominant bullish force in wheat, while corn and soybeans will need continued export demand or a deterioration in weather to generate another independent bullish domino.

NASDAQ: SNEX

Walk- Squawk Morning Wire

Walk-Squawk — Wed, 26 Aug 2026 11:51:01 GMT

The Market Is Waiting for a Reason to Move

Stocks remain stuck in a holding pattern this morning as investors prepare for a concentrated run of market-moving catalysts. Price action has been choppy, volatility remains subdued, and neither buyers nor sellers have been able to establish much control.

That indecision makes sense. Between Nvidia earnings, the latest PCE inflation data and Fed Chair Kevin Warsh’s Jackson Hole speech on Friday, traders are about to receive important new information on the three forces currently driving markets: artificial intelligence spending, inflation and interest rates.

The market may look quiet, but it feels more like compression than complacency. A larger move appears to be building. The catalysts over the next few days may determine its direction.

Nvidia Is Bigger Than an Earnings Report

Nvidia reports after Wednesday’s close, with the options market pricing a move of roughly 5% in either direction.

Expectations for the quarter itself are already extremely high. Wall Street anticipates revenue and net income nearly doubling from a year earlier. That means simply beating estimates may not be enough.

The real focus will be on forward guidance and what management says about:

Hyperscaler capital spending
Demand for Blackwell and Vera Rubin chips
Gross margins
Rising memory and server costs
Nvidia’s growing role in financing AI infrastructure

That final point has become particularly important. Nvidia recently partnered with major financial firms on as much as $500 billion of AI infrastructure financing and committed up to $105 billion toward an Ohio data-center project that will be leased by OpenAI.

Investors want to know whether these arrangements are supporting legitimate long-term demand or creating a circular system in which Nvidia is indirectly helping finance the customers buying its chips.

This is why the report has become a referendum on the broader AI investment cycle. The market is trying to determine whether hyperscalers are still accelerating spending or beginning to demand clearer returns on the hundreds of billions already committed.

Nvidia’s stock has fallen the day after five of its previous six reports and after each of the past four. That does not necessarily signal weak business conditions. It shows how difficult it has become for the company to clear the market’s expectations.

A strong report with convincing guidance could revive the semiconductor trade and pull the Nasdaq out of its summer range. A good report accompanied by cautious guidance could still be sold. A genuine disappointment would raise broader questions about AI infrastructure spending and likely spill across global equities and credit markets.

Inflation Still Controls the Bond Market

PCE inflation is the next major piece of the puzzle. Consensus expects core PCE to rise around 0.2% for the month, with the year-over-year reading likely near 3.2% to 3.3%.

A number near expectations would probably keep the market focused on Jackson Hole. A softer reading could extend the recent decline in Treasury yields and support growth stocks. A hotter print would revive the concern that inflation is settling closer to 3% than the Fed’s 2% objective.

That risk has become more relevant after July inflation readings across several developed economies surprised to the upside. At the same time, governments are issuing more debt, AI infrastructure is consuming enormous amounts of capital and energy, and geopolitical disruptions remain capable of producing another inflation shock.

Oil has offered some short-term relief. Brent has fallen roughly 9% this week as Iran and Oman discuss an interim framework to restore shipping through the Strait of Hormuz. The decline has helped pull the 30-year Treasury yield lower and ease fears of another disorderly move in long-term borrowing costs.

But it has not sparked a meaningful equity rally. That suggests investors view cheaper oil as helpful, but not enough to resolve the larger debate over inflation, debt and interest rates.

Jackson Hole Must Provide Some Clarity

Friday’s Jackson Hole speech may ultimately be the most important catalyst because it gives Fed Chair Kevin Warsh an opportunity to explain how the central bank intends to return inflation to 2%.

Warsh has avoided committing to a clear policy path since taking over the Fed, even as the central bank has held rates unchanged for five consecutive meetings. That uncertainty has made it harder for markets to understand the Fed’s reaction function and contributed to volatility in longer-dated Treasuries.

The challenge is that the Fed is confronting several competing forces:

Inflation remains above target.
Energy and geopolitical risks have not disappeared.
AI investment is supporting economic growth but also increasing demand for capital, power and infrastructure.
Rising deficits and interest expenses are pressuring long-term bond yields.

A more hawkish message would likely push yields and the dollar higher while pressuring technology and other long-duration assets. A more balanced message acknowledging the inflation risks without signaling an imminent hike could calm bonds and support equities.

The Setup

The market is essentially waiting for three questions to be answered:

Is the AI spending cycle still accelerating?
Is inflation finally cooling, or becoming entrenched near 3%?
Will the Fed tolerate that inflation, or lean toward tighter policy?

Until those answers arrive, the chop may continue. Volatility is low, positioning appears comfortable, and the Nasdaq has largely moved sideways since early June. That creates the possibility of a sharper adjustment once the market receives a catalyst strong enough to force investors out of their current positions.

The next move may be substantial, but traders should be careful about predicting the direction before the information arrives. Nvidia can validate or challenge the AI narrative. PCE can move the bond market. Jackson Hole can reset expectations for the Fed.

For now, the market is not asleep. It is waiting.

Grain Desk: Crop Ratings and Black Sea Risk Fuel the Rally

Grain markets are extending their rally after another round of bullish developments tightened the supply narrative across corn, soybeans and wheat.

The biggest domestic surprise came from Monday afternoon’s Crop Progress report. Corn and soybean conditions both declined more than traders expected, reinforcing the lower yield estimates produced by the Pro Farmer Crop Tour. At the same time, worsening disruptions in the Black Sea pushed wheat to its highest level in more than two years.

Corn: Ratings Reinforce the Yield Debate

December corn closed Tuesday at $5.23½, up 8 cents, while September gained 9 cents to $5.00½. Corn has now advanced for six consecutive sessions, its longest winning streak in more than a year.

The USDA lowered the national corn rating by a surprising three percentage points to 57% good-to-excellent. That leaves the crop four points below its five-year average and adds credibility to the Pro Farmer tour’s lower national yield estimate.

Most of the deterioration occurred across the western Corn Belt and upper Midwest:

North Dakota fell 7 points
Nebraska declined 4
Michigan slipped 3
Minnesota, South Dakota and Wisconsin each lost 2

Late-season rainfall may still help some of the northwestern Corn Belt, but it is arriving too late to produce a major improvement in national yield potential. World Weather expects scattered showers across the Midwest over the next two weeks, though totals will generally remain too light and inconsistent to prevent net drying.

That pattern should help excessively wet soybean areas and reduce early harvest delays. However, it is unlikely to reverse much of the damage already reflected in corn conditions.

The rally has also slowed farmer selling. Producers who were willing sellers at lower prices have stepped back as crop ratings decline and speculation builds that prices may have further upside. That is helping tighten nearby availability and add support to the board.

Brazil is becoming part of the forward corn story as well. Early expectations suggest limited acreage growth for the next crop, while analysts are beginning to consider the effect of reduced fertilizer availability and elevated prices on yield potential.

Brazilian fertilizer deliveries are projected to fall 7.7% in 2026. Continued shipping problems around the Strait of Hormuz could further restrict supplies to major fertilizer-importing countries such as Brazil.

This matters because Brazil’s growing corn-ethanol industry is already absorbing more domestic production and limiting its ability to expand exports. If fertilizer constraints reduce yields, the cushion available to the world market could become even smaller.

Soybeans: Crop Ratings and Soybean Oil Provide Support

November soybeans finished at $12.37¾, up 13½ cents, after the national crop rating declined one point to 60% good-to-excellent. That puts soybeans two points below their five-year average.

The weakness was again concentrated across the northern and western growing regions. North Dakota fell seven points, Wisconsin and Ohio declined three, Minnesota and South Dakota lost two, and Iowa slipped one.

Soybean oil also recovered sharply after testing its July lows. The market had been pressured by rumors that the Trump administration could approve a larger expansion of small refinery exemptions, potentially weakening biomass-based diesel demand.

However, several influential senators publicly supported limiting the exemptions and warned the administration against approving the quantities being discussed. That helped reassure the market, although the potential expansion has not been formally ruled out.

The stakes remain high because a substantial portion of soybean oil’s value depends on federal biofuel policy. Until the administration provides clarity, soybean oil is likely to remain headline-sensitive.

Cash soybean movement was limited Tuesday, but river basis showed some underlying firmness. September soybean CIF bids improved two cents to 105 over November futures. Domestic crush margins remain near $3 per bushel, while spot soybean meal and soybean oil basis were mostly steady.

Chinese demand also remains constructive. China booked 45 soybean cargoes last week, matching the previous week, with 26 sourced from South America and 19 from the United States. China has now secured an estimated 106.5 million metric tons for the current crop year, leaving roughly 6.5 million tons to reach the USDA’s 112-million-ton import forecast.

The USDA also announced a flash sale of 132,000 metric tons of new-crop soybeans to unknown destinations.

Wheat: The Black Sea Risk Premium Returns

Chicago wheat briefly reached its highest level since May 2024 as the market reassessed the severity of Black Sea export disruptions. September Chicago wheat closed at $6.85½, up 3¾ cents, while Kansas City wheat gained 4 cents to $7.54½.

Russian and Ukrainian grain shipments are facing increasingly serious logistical problems. Russia’s August grain exports are now expected to total just over 2 million metric tons, 20% below the forecast from two weeks ago and less than half the five-year August average of 5.7 million tons.

Russia is considering several measures to support its grain sector, including suspending its floating export duty through the end of 2026, subsidizing rail shipments, extending producer loans and exploring alternative routes through the Caspian Sea.

Those measures may help producers, but they do not solve the immediate shipping problem. Russian wheat remains extremely competitive, with FOB offers reportedly near a $100-per-ton discount to U.S. hard red winter wheat. The constraint is increasingly about the ability to move grain, not the willingness to sell it.

Conditions in Ukraine are even more concerning. The ongoing blockade of Black Sea ports is restricting current exports and weakening farmers’ ability to finance and plant next year’s crop. That begins to shift the story from a temporary logistics disruption toward a potential production issue.

U.S. spring wheat conditions added modest support. Ratings declined another point to 51% good-to-excellent, five points below the five-year average, while harvest advanced to 57% complete.

Bottom Line

The grain trade is building a broader supply-risk premium.

Corn has weaker U.S. crop ratings, reduced farmer selling and new concerns about Brazilian fertilizer availability. Soybeans are receiving support from deteriorating conditions, steady Chinese demand and a rebound in soybean oil. Wheat is confronting a Black Sea disruption that is affecting both current exports and future production.

The rally has become technically extended after several strong sessions, so profit-taking remains possible. But unless U.S. weather improves materially or the Black Sea shipping situation stabilizes, sellers may be reluctant to press the market aggressively.

For now, the trade is being forced to reconsider whether the comfortable global supply outlook assumed earlier this summer is still realistic.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Tue, 25 Aug 2026 12:18:10 GMT

Oil Retreat Gives Stocks and Bonds Room to Breathe

Markets are attempting to stabilize this morning as investors respond to a modest improvement in the Middle East outlook.

U.S. equity futures are higher, led by a rebound in technology shares. Crude oil is pulling back, while Treasuries are rallying across the curve, pushing yields lower. The combination of cheaper oil and falling yields is providing some relief after geopolitical risk, inflation concerns and pressure in the bond market weighed on sentiment.

The immediate catalyst is a series of cautiously positive developments surrounding Iran.

Qatar says it is continuing mediation efforts between the United States and Iran, while reports that Washington is preparing to return diplomats to U.S. embassies across the Middle East suggest the administration may not expect an immediate return to full-scale fighting. None of this represents a formal breakthrough, but it lowers the perceived probability of another near-term escalation.

That is enough to remove some of the geopolitical premium from crude oil. Brent has fallen back below $90 per barrel and is trading near a one-week low.

That move matters well beyond the energy market.

The conflict has disrupted shipping through the Strait of Hormuz, raised freight and insurance costs and increased the price of fuel, fertilizer and other industrial inputs. As oil retreats, the market can price slightly less inflation pressure and a smaller risk that the energy shock will force central banks to remain tighter for longer.

That is helping explain the strength in Treasuries this morning. Bond prices are rising and the 10-year yield is down roughly four basis points. Lower yields, in turn, are supporting equity valuations, particularly in the technology sector where longer-duration growth stocks are especially sensitive to changes in interest rates.

From Military Pressure to Economic Pressure

The geopolitical situation is improving at the margin, but the underlying conflict is far from resolved.

Treasury Secretary Scott Bessent has shifted the administration’s focus toward what he described as an economic assault on Iran’s global financial connections. The U.S. announced additional sanctions and threatened secondary penalties against companies and countries that continue doing business with Tehran.

The problem is that China buys roughly 90% of Iran’s exported oil.

Any sanctions campaign that avoids Chinese buyers is unlikely to fully isolate Iran. But a campaign that aggressively targets Chinese refiners, banks or trading companies could reopen the economic confrontation between Washington and Beijing.

China has already defended its trade relationship with Iran and warned that it will protect its interests. Beijing could retaliate through restrictions on critical minerals, pharmaceuticals or other goods that remain important to U.S. supply chains.

That leaves the administration facing a difficult balance. Washington wants to squeeze Iran’s energy revenues without driving oil sharply higher, damaging the global economy or undermining the fragile trade truce with China ahead of the expected Trump-Xi meeting in September.

Bessent’s preference for “quiet diplomacy” suggests the U.S. may initially use the threat of secondary sanctions to pressure buyers away from Iranian crude rather than immediately targeting major Chinese institutions.

The market is currently interpreting that as a less disruptive approach. Oil is lower because traders see a reduced risk of immediate military escalation, but the sanctions threat means the geopolitical premium is unlikely to disappear completely.

Tech Attempts to Rebound

Technology shares are leading this morning’s equity advance, with Nasdaq futures outperforming and Nvidia positioned to snap its longest losing streak since 2022.

The rebound is being helped by lower yields, but it also comes ahead of Nvidia earnings, which remain a major test for the broader artificial-intelligence trade.

The debate has evolved. Investors are no longer questioning whether AI demand exists. The bigger question is whether the enormous infrastructure buildout can continue producing returns that justify current spending and valuations.

Nvidia therefore needs to do more than report strong backward-looking results. Investors will be watching forward guidance, customer spending plans and any evidence that demand for AI infrastructure remains strong enough to support higher earnings estimates.

What the Market Is Trading

This morning’s risk-on move is primarily a relief trade.

Stocks are benefiting from lower oil and lower yields, while bonds are responding to a modest reduction in both geopolitical and inflation risk. Technology is leading because it was recently under pressure and remains the portion of the market most sensitive to interest rates.

The current chain reaction looks like this:

Positive Qatar mediation headlines reduce the immediate risk of escalation.
Lower escalation risk removes some of the premium from crude oil.
Lower oil eases inflation concerns.
Easing inflation concerns support Treasuries and push yields lower.
Lower yields provide valuation support for technology and the broader equity market.

The important question is whether this can develop into something more durable.

A genuine diplomatic breakthrough would likely reinforce the decline in crude, extend the Treasury rally and provide a stronger tailwind for equities. But renewed military escalation, disruption in the Strait of Hormuz or aggressive enforcement of sanctions against Chinese firms could quickly reverse the move.

For now, the market is leaning toward de-escalation without declaring the conflict resolved. That is giving stocks and bonds room to rally, but the week’s larger direction will still depend on Nvidia, incoming economic data and Fed Chair Kevin Warsh’s upcoming speech.

The overnight message is straightforward: geopolitical risk has eased at the margin, oil is giving back some of its war premium, and falling yields are allowing technology shares to breathe again.

Grain Desk: Black Sea Disruptions and SRE Anxiety Shake Up the Trade

Two separate policy stories are driving the grain and biofuel markets this morning: Russia is considering suspending its grain export duty, while speculation around small-refinery exemptions is forcing some crowded soybean oil longs to reduce risk.

Russia Considers Suspending Grain Export Duty

Russia is reportedly weighing a suspension of its floating export duty on wheat, barley and corn through the end of 2026. The proposal is intended to support exporters struggling with growing logistical problems following Ukrainian attacks on Russian ports and commercial shipping.

Ukraine’s recent strike on Novorossiysk damaged three major grain terminals and temporarily halted exports. Additional attacks have disrupted shipping through the Black Sea and Sea of Azov, which normally handle more than 70% of Russia’s grain exports.

The effect is already showing up in the shipment data. Russian wheat exports are projected at just 1.8 million metric tons in August, down roughly 60% from last year and the lowest August volume since 2010.

Suspending the export tax would improve margins for Russian exporters and could eventually encourage more grain to reach the world market. However, removing the duty cannot repair terminals, secure vessels or eliminate the higher freight and insurance costs associated with moving grain through an active war zone.

That creates two competing signals for wheat:

The possible suspension of Russia’s export tax is bearish longer term because it would make Russian grain more competitive.
The immediate disruption to ports and vessels is supportive because physical exports are being delayed during harvest.

The near-term trade should remain sensitive to shipping headlines. If port disruptions persist, the market may focus more on lost export availability than on the proposed tax relief. Russia and Ukraine together account for more than one-quarter of global wheat exports, making any sustained interruption important to the global balance sheet.

SRE Estimates Rattle Soybean Oil

Soybean oil is also pulling back as traders reconsider the potential size of the EPA’s upcoming small-refinery exemption decision.

The market had become increasingly comfortable with an exemption package representing approximately 1.2 billion to 1.3 billion RINs. At that level, many traders viewed the announcement as largely priced in and relatively manageable for biofuel demand.

New analysis suggesting the EPA could approve exemptions exceeding 1.8 billion RINs has thrown a wrench into that confidence.

The concern is that a larger-than-expected exemption package would reduce the amount of renewable fuel compliance required from refiners. That would weaken demand for RIN credits and potentially reduce the need for biomass-based diesel blending, depending on how the EPA handles reallocation and future renewable volume obligations.

D6 ethanol RINs may face the most direct pressure if refiners do not need to use D4 biomass-based diesel credits to cover a compliance deficit. Still, soybean oil is reacting because any perceived erosion in renewable diesel demand threatens one of the market’s strongest bullish narratives.

Long positioning had become increasingly comfortable following the recent rally. With the EPA decision approaching and the potential exemption number suddenly moving from around 1.2 billion toward 1.8 billion RINs, some of those longs are now taking profits rather than carrying the full risk into the announcement.

Bottom Line

The soybean oil break looks less like a complete change in the underlying biofuel story and more like nervous positioning ahead of an uncertain EPA decision.

The market now needs clarity on three issues:

The final volume of exemptions granted
Whether the exempted gallons or RIN obligations will be reallocated
How the decision affects renewable fuel requirements through 2027

Until those details arrive, soybean oil is vulnerable to additional long liquidation. A number near 1.8 billion RINs without meaningful reallocation would be bearish. A smaller total, or an EPA plan that restores the lost obligations elsewhere, would likely ease the market’s concerns and could quickly bring buyers back into the trade.

Crop Progress, Cash Markets and Weather

Crop Progress and Conditions

Monday’s crop report offered additional support to the tightening U.S. production narrative, particularly in corn.

National corn conditions fell three points to 57% good to excellent, below the 59% trade estimate, down from 60% last week and below the five-year average of 61.2%. The deterioration was concentrated across the northern and western Corn Belt, with North Dakota falling seven points, Ohio down five, Nebraska down four and Michigan down three.

Iowa remains the standout at 78% good to excellent, but the broader national decline reinforces concerns raised by last week’s Pro Farmer Crop Tour. The tour estimated the national corn yield at 173.2 bushels per acre, well below USDA’s August figure.

The crop is moving through its final development stages at a relatively normal pace:

Corn dented reached 45%, versus 41% on average.
Corn mature reached 6%, matching the five-year average.
Harvest is beginning across the Delta and Southeast, with Arkansas at 42%, Georgia at 50% and Louisiana at 78%.

Soybean conditions slipped one point to 60% good to excellent, below the 61% expectation and five-year average of 61.4%. Ratings remain strong in Iowa at 77%, but conditions deteriorated further in the Dakotas, Kansas and Ohio. North Dakota soybeans fell seven points to just 27% good to excellent, while South Dakota declined three points to 46%.

Soybean pod setting reached 91%, ahead of the 88% average. Six percent of the crop is dropping leaves, compared with 4% normally. The crop is now deep into seed fill, making late-August moisture especially important across the drier northern and western areas.

Winter wheat harvest is complete, while spring wheat harvest advanced 21 points to 62%, ahead of the 52% average. Spring wheat conditions were reported at 51% good to excellent, in line with expectations and above the five-year average of 46%.

The report was supportive overall. Corn conditions deteriorated more than expected, while soybeans continue to show a widening regional divide between strong crops in Iowa and the Delta and considerably weaker crops across the northern Plains.

U.S. Cash Market

The futures rally is beginning to generate more farmer selling, but much of the activity remains concentrated in old-crop grain.

Corn basis was mostly steady across the interior, with pockets of improvement in Ohio and Indiana. Producers are cleaning up remaining old-crop inventories ahead of harvest, while new-crop selling remains more selective.

Reports suggest farmers have made some new-crop corn sales near $5.00 futures, with additional orders waiting around $5.25 to $5.50. Iowa producers are reportedly looking for another larger selling wave near $5.35 to $5.40 futures. Nebraska sales have also increased where strong western basis levels are creating profitable opportunities.

The important takeaway is that producers remain relatively undersold on new crop. Another push higher could produce considerably heavier hedge pressure, especially with managed money already carrying a historically large long position into harvest.

Soybean basis remains firm for nearby supplies as processors bridge the gap to harvest. Crush margins are near $3.00 per bushel, and some crushers need approximately two more weeks of coverage before new-crop beans become available.

Nearby soybean bids remain strong at several processing locations, but basis drops sharply into September and October as the market anticipates harvest movement. That structure continues to reward producers who still have old-crop soybeans available.

Cash soybean meal weakened in the interior, while Gulf export offers firmed. Refined soybean oil basis was steady, but the lack of fourth-quarter offers reflects ongoing uncertainty surrounding California regulations and federal biofuel policy.

South American Cash

Brazilian soybeans traded at firm premiums, with October reported near 168 cents over November futures and November near 171 over. September basis improved one cent, while October gained approximately five cents.

The Brazilian real weakened modestly to around 5.15 per dollar, which slightly improves the local-currency return available to Brazilian farmers. Even so, selling was not especially aggressive.

Brazilian soybean meal was quiet, with October offers approximately $1 firmer. Brazilian soybean oil basis strengthened sharply, gaining roughly 260 to 300 points in the nearby positions.

Argentina’s soybean, meal and corn markets were largely inactive. Farmer selling slowed considerably, with daily corn sales down 36%, soybean sales down 36% and wheat sales down 23% from the previous session.

The slower Argentine movement is not necessarily a sign of tighter supplies. Currency uncertainty and producer reluctance to sell remain major influences on day-to-day activity.

China Cash Update

China crushed 2.217 million metric tons of soybeans last week, slightly below the 2.285-million-ton estimate and below both the previous week and last year.

Despite the weekly miss, cumulative October-through-August crush has reached 92.565 million tons, up 8.27% from last season. This week’s crush is expected to rebound to approximately 2.398 million tons.

Meal demand is holding relatively firm, but China continues to carry substantial soybean and product inventories:

Soymeal stocks fell 3.8% for the week to 1.110 million tons, but remain 5.4% above last year.
Soybean oil stocks rose 1.1% to 1.426 million tons and are more than 20% above last year.
Crush margins remain positive for nearby U.S. beans and for Brazilian supplies arriving during the fourth and first quarters.

The large soybean oil inventory is the weak point. It reduces the urgency for additional oil demand and adds pressure at a time when the U.S. soybean oil market is already nervous about small-refinery exemptions.

China’s hog market improved slightly but remains weak. Average hog margins recovered to a loss of $3.28 per head from an $8.21 loss last week. Hog prices rose 4.4% for the week but remain more than 14% below last year.

The improvement is mildly supportive for feed demand, although livestock profitability has not recovered enough to produce a major expansion signal.

Weather Rundown

The U.S. forecast remains highly regional.

Regular rounds of Midwest showers are expected during the next two weeks, but totals should generally be light enough to allow net drying. That is beneficial for excessively wet soybean areas in Illinois, Indiana and the Ohio River Valley and should reduce concerns about early harvest delays.

The northwestern Corn Belt should receive some useful rain over the next week. Those showers could stabilize soybeans and late-developing corn, but they are arriving too late to produce a major improvement in overall yield potential.

The market’s ideal finish now looks like moderate temperatures, sunshine, cool nights and enough rainfall to complete corn grain fill and soybean pod fill without creating additional disease or harvest problems.

The Delta and Southeast will see daily showers through Friday, temporarily slowing fieldwork but helping immature crops. A drier pattern develops over the weekend and continues into early September, allowing harvest to accelerate but potentially increasing stress on later-planted crops.

Brazil and Paraguay should remain mostly dry, supporting cotton, wheat and safrinha corn harvest. Rain increases across southern Brazil late this week and again during the first week of September. Far southern Brazil could receive heavy totals and face localized flooding.

Argentina will see more sunshine than rain over the next two weeks. That should improve fieldwork, but west-central and northwestern wheat areas still need more substantial moisture. Forecast showers appear too scattered to eliminate those concerns.

Bottom Line

Crop ratings and weather continue to favor corn over soybeans.

Corn conditions deteriorated more than expected, the Pro Farmer yield estimate remains well below USDA and northern and western production concerns are becoming more difficult to dismiss. However, the market is also carrying a very large speculative long position, and higher prices are beginning to attract more farmer selling.

Soybeans have a less straightforward setup. U.S. conditions declined slightly, but the Pro Farmer yield estimate remains large, Chinese inventories are comfortable and soybean oil is under pressure from biofuel-policy uncertainty.

That leaves corn supported by production risk, while soybeans need either a clearer demand catalyst or a more threatening finish to the U.S. growing season.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Mon, 24 Aug 2026 12:07:28 GMT

Policy Is Becoming the Market

Markets begin the week confronting three different stories with a common thread: governments are becoming increasingly involved in determining where capital, commodities and trade flows move next.

In bonds, Treasury Secretary Scott Bessent is trying to relieve pressure on long-term borrowing costs through expanded debt buybacks. In trade, the United States and Canada have entered a new phase of tariff escalation. In commodities, the threat from a strengthening El Niño is less about rainfall itself and more about the export restrictions, fertilizer disruptions and energy substitutions it could trigger.

The initial catalyst may come from Washington or the weather. The larger market move comes from the reaction.

Bessent Reaches for the Treasury’s Cash Pile

Treasuries opened the week firmer after reports that the Treasury Department could use part of its cash balance at the Federal Reserve to finance expanded buybacks of older, higher-yielding government debt.

The Treasury General Account held approximately $935 billion as of August 20. Drawing from that balance would allow Treasury to purchase more long-dated securities without immediately funding the operation through additional bill issuance.

The 10-year yield fell as much as four basis points to 4.69% following the report.

The proposal is the latest part of what Bessent has described as a “Treasury twist,” an effort to improve liquidity and reduce pressure on longer-term yields by buying back older debt. The problem is that buybacks do not eliminate the government’s financing needs. They primarily change the maturity and location of debt held by the market.

If Treasury funds buybacks by selling more bills, it removes duration from private balance sheets but increases short-term issuance. If it uses the TGA, it temporarily injects liquidity into the financial system, but reduces the government’s cash cushion and eventually creates a need to rebuild it.

That makes the operation closer to liquidity management than traditional quantitative easing. The Federal Reserve creates reserves to purchase securities. Treasury can only redirect cash it already holds or issue new debt elsewhere on the curve.

The distinction matters because the forces pushing long-term yields higher remain largely untouched.

Government deficits are still running near 6% of GDP, federal interest expense exceeds $1 trillion annually and global debt issuance remains historically large. At the same time, hyperscalers are borrowing aggressively to finance the AI buildout, creating additional competition for long-term capital.

Inflation uncertainty following the Iran conflict has added another risk premium.

That helps explain why the initial bond rally following Bessent’s announcement faded so quickly. The 10-year yield ended last week near 4.73%, close to its highest level since Bessent took office.

Buybacks can improve liquidity and provide temporary relief, but they cannot control inflation expectations or convince investors that the fiscal trajectory has changed. For the strategy to produce a sustained rally, markets must believe it is a bridge toward lower deficits rather than an attempt to suppress yields without addressing their underlying cause.

Absent that credibility, investors will continue setting the long end of the curve.

Canada and the United States Escalate

The bond-market intervention comes as another policy shock develops across the northern border.

The United States has imposed a 50% tariff on hundreds of Canadian products, including furniture, plastics, plywood and electrical equipment. Unlike earlier measures, the new tariffs apply even to some products compliant with the US-Mexico-Canada Agreement.

For affected Canadian manufacturers, a 50% levy can effectively eliminate access to their largest export market.

Canada exported approximately $454 billion of goods and services to the United States last year while importing $426 billion. The depth of that relationship means the economic damage will not remain entirely on one side of the border.

Canada’s dollar fell as much as 0.6% following the escalation. One estimate suggests the tariffs could cost approximately 90,000 Canadian jobs if they remain in place, while subtracting between 0.2 and 0.3 percentage points from Canadian economic growth this year and next.

Prime Minister Mark Carney has announced counter-tariffs on $20 billion of US goods beginning September 8, targeting steel, dairy products, appliances and electronics. The delayed implementation leaves a narrow window for negotiations to restart, but Ottawa reportedly sees little chance of a broader agreement before the US midterm elections.

The result is an uncomfortable mix for the Bank of Canada. US tariffs weaken Canadian exports and economic growth, while Canada’s retaliatory measures raise domestic prices. That combination limits the central bank’s ability to respond cleanly in either direction.

The United States will also feel the effects. Canada is the largest export market for American automakers and the top customer for at least 25 states. Tariffs may protect selected domestic industries, but they also increase costs for manufacturers and consumers operating across deeply integrated supply chains.

With the midterms approaching, the economic consequences of the trade dispute are becoming political consequences as well.

El Niño’s Second-Order Trade

Weather could introduce another layer of policy risk.

A very strong El Niño, a category recorded only three times over the past 75 years, is increasingly becoming the base case. The probability of El Niño peaking between October and December has risen to 81%, with a 73% chance of reaching the strong threshold as early as July through September.

The obvious approach is to identify the countries likely to receive too much or too little rainfall. But history shows that El Niño is not a clean global grain-shortage trade.

Strong previous events reduced South African corn production by roughly 40% and Australian wheat output by around 22%, while leaving total global production largely unchanged. Regional losses can be offset by improved crops elsewhere.

The more powerful trade comes from what regional shortages force governments and industries to do next.

When domestic food supplies tighten, governments frequently restrict exports to contain inflation. Those restrictions can remove more supply from the international market than the original crop loss would justify.

India’s sugar inventories are reportedly near 30-year lows, and export restrictions have already begun. Rice near $500 per tonne remains below the approximately $670 peak reached during the 2023–24 export-ban squeeze, leaving room for another policy-driven move if crop conditions deteriorate.

The market does not need a global shortage. It only needs stress in a politically sensitive exporting country.

Fertilizer and Energy Feel the Effects

Fertilizer represents a slower-burning second-order risk.

El Niño alone has not historically supported fertilizer prices. Urea and potash declined during the strong 1997–98 and 2015–16 events. This time, however, weather risk is arriving alongside geopolitical disruption.

The Persian Gulf accounts for roughly 43% of seaborne urea shipments, leaving nitrogen markets exposed to the Iran conflict. Russian and Belarusian supplies remain vulnerable to disruptions connected to the war in Ukraine.

If crop losses lift grain prices, farmers will have a stronger incentive to maximize yields through additional fertilizer applications. That demand could emerge just as production and transportation networks are already constrained.

European natural-gas prices, ammonia values, Gulf shipping conditions and major international import tenders will be the leading indicators.

The cleaner physical transmission may come through energy.

Hydropower accounts for 70% to 95% of electricity generation across parts of Latin America and Africa. When rainfall falls short and reservoirs decline, utilities must replace lost hydro generation with natural gas, coal or oil-fired power.

Meanwhile, rainfall around the Panama Canal watershed has reportedly been running 34% below average since May 1. Reduced drafts and daily transit limits are forcing ships to wait, carry less cargo or take longer routes.

Less hydro means greater demand for thermal fuels. Less canal capacity means higher freight costs and more tonne-miles to transport them.

That places LNG exporters, thermal-coal producers and tanker operators directly on the other side of the disruption.

The Morning Takeaway

The major stories this morning may appear unrelated, but each reflects the growing influence of policy and physical bottlenecks over market pricing.

Treasury buybacks can temporarily ease pressure on long-term yields, but they do not resolve the deficits, inflation uncertainty or global competition for capital driving those yields higher.

Tariffs can redirect trade, but they also weaken growth, raise costs and complicate central-bank policy on both sides of the border.

El Niño can damage crops and reduce hydro generation, but the most significant moves may come from the export bans, fertilizer demand, fuel switching and freight disruptions that follow.

Markets are watching yields, tariffs and rainfall.

The real trade is what policymakers, producers and supply chains are forced to do next.

El Niño Is Coming, but the Rain Is Not the Trade

A potentially historic El Niño is moving closer to becoming the base case, with an 81% probability of the event peaking between October and December and a 73% chance it reaches the strong threshold as early as July through September.

Only three comparable episodes have occurred over the past 75 years: 1982–83, 1997–98 and 2015–16. Historically, the most disruptive weather has arrived in two waves, first during September and October and then again between January and March.

But the real market opportunity may not be found in rainfall forecasts or global crop-loss estimates.

Weather is only the first move. The bigger trade is what the weather forces governments, farmers, utilities and shipping companies to do next.

Previous El Niño events show why this distinction matters. Strong episodes have reduced South African corn production by roughly 40% and Australian wheat output by approximately 22%, while leaving total global grain production relatively stable. Losses in one region can be offset by better crops elsewhere, making El Niño an unreliable global grain-shortage trade.

The more explosive risk comes when regional shortages trigger government intervention.

When food supplies tighten, exporting countries often restrict shipments to contain domestic inflation. Those policy decisions can remove far more supply from the world market than the original crop loss would suggest.

India is already moving in that direction. Sugar inventories are reportedly near 30-year lows, and export restrictions have begun. Rice near $500 per tonne remains well above the 2025 lows of roughly $370 to $400 but below the approximately $670 peak reached during the 2023–24 export-ban squeeze.

The world does not necessarily need a severe rice or sugar shortage to produce another major price move. It only needs enough domestic stress for a large exporter to close the door.

The crop loss begins the process. Government policy creates the convexity.

Fertilizer represents another potential second-order trade, although El Niño alone has historically not been enough to lift prices. Urea and potash declined during both the 1997–98 and 2015–16 events.

The difference in 2026 is that weather risk is arriving on top of geopolitical disruption.

The Iran conflict has threatened Persian Gulf trade routes responsible for roughly 43% of seaborne urea shipments, helping push urea prices higher since April. Meanwhile, the war in Ukraine continues to leave Russian and Belarusian fertilizer supplies exposed to sanctions and logistical uncertainty.

El Niño could add another source of pressure. If regional crop losses lift grain prices, farmers will have a greater incentive to maximize yields through additional fertilizer applications. That demand could arrive just as global production and transportation networks are already strained.

Nitrogen carries the greatest upside risk because its production is closely tied to natural-gas prices and Persian Gulf exports. European gas prices, ammonia values, major import tenders and Gulf shipping conditions will be the leading indicators to watch.

The most direct physical transmission, however, may come from energy.

Across parts of Latin America and Africa, hydropower accounts for 70% to 95% of electricity generation. When rainfall declines and reservoirs fall, utilities must replace that lost generation with natural gas, coal or oil-fired power.

That substitution can occur just as warmer temperatures increase electricity demand for cooling.

Less hydropower therefore means greater demand for thermal fuels, creating potential support for LNG, coal and refined-product markets.

The Panama Canal could amplify that pressure. Watershed rainfall has reportedly been running 34% below average since May 1, forcing canal authorities to reduce vessel drafts and limit daily transits. Carriers are adding surcharges, while some vessels have reportedly paid millions of dollars to move ahead in the queue.

Lower canal capacity means longer waits, lighter cargoes or longer alternative routes. Each outcome increases freight costs and tonne-mile demand.

Put the two together and the transmission becomes straightforward: less hydro means more demand for thermal fuels, while less canal capacity makes those fuels more expensive to transport.

For equities, the relevant exposures are not companies that simply benefit from bad weather. They are the businesses positioned closest to the resulting supply-chain disruptions.

That includes grain merchants navigating export restrictions, fertilizer producers with reliable Western production and logistics, and LNG exporters, coal producers and tanker operators exposed to the hydro-to-thermal transition and longer shipping routes.

A catastrophic El Niño is not required for any of this to matter.

Markets only need enough regional stress to force governments to restrict exports, farmers to change their fertilizer decisions, power grids to switch fuels and shipping companies to reroute cargoes. Those reactions can be nonlinear and considerably more important than the initial weather event.

The hydro-to-thermal switch offers the cleanest physical transmission. Export restrictions create the most explosive policy risk. Fertilizer remains the slower-burning setup operating underneath both weather and geopolitical pressure.

The market is watching the rain.

Watch what the rain forces everyone else to do.

Grain Desk: Funds Pile Back Into Corn and Soy as Yield Debate Heats Up

Grain markets went home Friday with momentum firmly pointed higher after a week dominated by aggressive fund buying, the Pro Farmer Crop Tour and continued strength in parts of the cash market.

Corn was the standout, gaining roughly 25 cents, or 5%, for the week. December futures have now advanced in six of the eight sessions since the August USDA report and pushed above the May high at $5.06 on Friday. Soybeans and soybean meal gained between 3% and 4% on the week, while wheat finished modestly higher. Soybean oil added less than 1% after surrendering a larger weekly gain during Friday’s volatile session.

COT: Funds Came Back Aggressively

The Commitments of Traders report, reflecting positions through Tuesday, August 18, showed substantial managed-money buying across nearly the entire grain and oilseed complex.

Managed money increased its net corn long by 83,735 contracts to 250,505 contracts. That was still approximately 16,000 contracts smaller than the market expected, but it represented the largest weekly positioning change among the major contracts.

Soybeans produced the biggest surprise. Funds added 50,300 contracts, lifting their net long to 151,662 contracts, roughly 151,600 contracts more bullish than expected.

Across the entire soy complex, managed money added 79,100 net-long contracts:

Soybeans: bought 50,300, raising the net long to 151,662
Soybean oil: bought 17,315, raising the net long to 98,237
Soybean meal: bought 11,448, raising the net long to 83,024

The combined managed-money long across soybeans, meal and oil reached approximately 253,900 contracts. During the comparable week last year, funds were net short roughly 53,900 contracts.

Funds also reduced their Chicago wheat short by 4,916 contracts to 26,485 contracts. They added 7,173 contracts in Kansas City wheat, lifting that net long to 34,835. Across all wheat classes, the managed-money position increased by approximately 13,900 contracts to a combined net long near 20,000, compared with a net short of more than 173,000 contracts one year ago.

The takeaway is straightforward: funds were already heavily involved in the rally through Tuesday, particularly in corn and soybeans. Positioning is no longer offering the same short-covering fuel it did earlier, but the size of the buying confirms that speculative money has embraced the tightening-yield narrative.

Pro Farmer Widens the Corn Yield Debate

After Friday’s close, Pro Farmer estimated the national corn yield at 173.2 bushels per acre, sharply below USDA’s August estimate of 180.7.

That 7.5-bushel gap was the largest difference between Pro Farmer’s tour estimate and USDA’s August figure since 2022. History suggests the final USDA number may land somewhere between the two. During similar discrepancies in 2019, 2022 and 2025, Pro Farmer’s estimate ultimately finished 2% to 3% below the final USDA yield.

Applying that pattern this year would point toward a final national yield closer to 177 to 179 bushels per acre. That would still represent a meaningful reduction from USDA’s current estimate without fully validating Pro Farmer’s 173.2.

For soybeans, Pro Farmer estimated a record yield of 53.3 bushels per acre, slightly above USDA’s 52.7. Iowa pod counts declined 2% from last year, while Minnesota improved 1%, leaving the soybean findings less uniformly bullish than corn.

Cash Markets Remain Supportive

The cash market ended the week with old-crop soybean basis providing support to September futures and the September-November spread. September-November beans settled at a 14 1/2-cent carry, narrowing by 1 1/4 cents Friday.

Spot soybean basis improved by 10 cents at Cedar Rapids, 20 cents at Sergeant Bluff and 5 cents at Sheldon. Illinois River basis strengthened by 2 cents. Gulf CIF soybean bids were also firmer, with August up 3 cents and September up 8 cents.

Cash soybean crush margins were reported near $3.25, with crusher ownership largely covered through August. Interior and Gulf soybean-oil basis remained firm for spot movement, while the report noted an absence of fourth-quarter offers amid uncertainty surrounding California regulations.

Corn basis was mostly steady, although Hammond, Indiana, strengthened sharply for nearby movement. Gulf CIF corn bids were mixed, with August up 2 cents and September down 1 cent.

South American markets were quiet. Brazil and Argentina reported little to no trade across soybeans, meal, oil and corn. Brazil’s June soybean crush reached 5.452 million metric tons, bringing February-through-June crush 6.7% above last year. Argentina’s seasonal soybean crush was 4.75% ahead of last year.

Weather: Mostly Benign Midwest Finish, Trouble in the Delta

The Midwest forecast is not threatening enough to add much fresh weather premium.

Infrequent rainfall and net drying are expected across much of the Corn Belt during the next two weeks. That should benefit excessively wet areas and reduce concerns about early harvest delays. Occasional rain will still favor drier areas of the northwestern Corn Belt, with the most organized system expected August 28-30.

Roughly 80% of the Midwest could receive some rain during that late-August window, although most totals are expected to remain below 0.75 inch. Temperatures should remain mostly mild during the coming week before trending warmer in the extended outlook.

The more concerning area is the Delta into western and southern Alabama, where hot and mostly dry weather is expected to increase crop stress and reduce yield potential. Forecast rain is unlikely to provide more than brief relief.

Brazil and Paraguay should remain mostly dry, supporting the completion of safrinha corn, cotton and wheat harvests. Argentina will also see more sunshine than rain, allowing fieldwork to advance, although parts of the western and northwestern wheat belt still need additional moisture.

Bottom Line

The market finished the week with a clearly bullish shift in momentum, especially in corn. Funds accumulated substantial long positions through Tuesday, cash soy markets remained supportive and Pro Farmer’s 173.2-bushel corn estimate intensified doubts surrounding USDA’s record yield projection.

The caution is that speculative positioning is now considerably longer, while the Midwest forecast remains broadly favorable for crop maturation and early harvest.

Corn enters the new week with the strongest fundamental catalyst and the cleanest technical momentum. Soybeans have strong money flow and cash support, but Pro Farmer’s record yield estimate complicates the supply argument. Wheat continues to benefit from reduced fund shorts and spillover strength, though it still lacks a decisive fundamental catalyst of its own.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Fri, 21 Aug 2026 12:07:34 GMT

Macro Desk: Treasury Whiplash Leaves Markets Waiting on Bessent

Treasuries are ending a volatile week on pause as traders question whether the administration has another tool capable of containing long-term borrowing costs.

The 10-year yield was holding near 4.69% Friday morning after swinging sharply in both directions over the past two sessions. Treasury Secretary Scott Bessent’s proposal to expand buybacks initially pushed the yield five basis points lower Wednesday, but much of that move quickly reversed as investors questioned whether the program could provide more than temporary relief.

The strategy amounts to a form of “QE-lite.” Treasury would repurchase longer-dated bonds and finance those purchases by issuing more short-term bills. That changes the composition of government debt available to investors, reducing some long-duration supply without expanding the Federal Reserve’s balance sheet.

In theory, fewer long-dated bonds in the market should support prices and suppress yields. It may also ease pressure on equities, housing and other rate-sensitive assets.

However, it does not eliminate the debt or address the underlying forces driving yields higher:

Large federal deficits
Persistent inflation concerns
Heavy Treasury issuance
Rising interest expenses
Limited political appetite for fiscal restraint

Treasury’s flexibility may also be constrained by the debt ceiling. Unlike Federal Reserve quantitative easing, Treasury buybacks must be funded. Replacing long-term debt with bills can provide temporary support, but it cannot continue indefinitely without increasing refinancing risk and dependence on short-term funding.

That leaves the market focused on what happens if buybacks fail and long-term yields begin climbing again. One possibility is that the Federal Reserve eventually feels compelled to purchase Treasuries, pulling monetary policy further into the fiscal debate even as policymakers discuss reducing the balance sheet.

That remains a last-resort scenario rather than the base case. The cleaner and more durable path toward lower yields would be softer inflation, slower nominal growth and credible fiscal consolidation. Without those developments, buybacks can manage market plumbing and temporarily absorb supply, but they are unlikely to reverse the broader trend by themselves.

Risk assets were firmer Friday, with S&P 500 futures gaining roughly 0.3% and crypto-linked stocks outperforming as Bitcoin approached $78,000. Bitcoin’s surge, which put it on pace for its strongest week since 2023, appears partly driven by a short squeeze following Bessent’s buyback announcement.

Elsewhere, Brent crude remained near $94 per barrel, gold reached its highest level since May and the dollar weakened approximately 0.3%. Those moves suggest the market is not treating Treasury’s intervention as an all-clear. Instead, investors are hedging against a difficult combination of fiscal stress, elevated inflation and pressure on long-term government debt.

The next major test comes at Jackson Hole, where Fed Chair Kevin Warsh will need to address inflation, balance-sheet policy and the possibility that persistent fiscal pressure could complicate the Fed’s plans. Swaps currently indicate approximately a one-in-three chance of a September rate hike, with a full increase priced closer to year-end.

Bottom line: Bessent’s buyback plan bought the bond market some time, but it has not solved the underlying problem. Unless inflation cools or Washington produces a credible fiscal plan, the long end is likely to remain volatile, leaving stocks vulnerable whenever yields resume their climb.

Grain Desk: Crop Tour Keeps Corn Supported, But Rally Is Getting Crowded

Grain markets finished mostly higher Thursday as lower Pro Farmer Crop Tour yield estimates, firm export demand and continued Black Sea tension supported prices. However, both corn and soybeans are approaching technically overbought territory after their recent rallies, increasing the risk of a near-term pullback.

December corn gained 5¼ cents to $5.03½, its highest close since early May, after reaching $5.06¼ during the session. Crop Tour estimates have generally remained below last year, encouraging funds to add an estimated 14,500 contracts Thursday. Managed money is now estimated net long roughly 303,000 corn contracts, leaving the trade increasingly crowded.

The $5.00 level becomes the first important support for December corn, followed by the $4.85 to $4.90 zone. Resistance sits near Thursday’s $5.06 high, which nearly matched the May peak and creates the possibility of a technical double top. The market may need another meaningful reduction in national yield expectations to sustain the rally from here.

Soybeans were unable to hold their overnight strength. November futures slipped ¾ cent to $12.36½ after trading roughly eight cents higher earlier in the session. Pod counts from the Crop Tour have generally been near or below last year, but August rainfall continues to support strong yield potential during the critical filling period.

The demand side remains constructive. USDA reported another 150,000 metric tons of new-crop soybeans sold to an unknown destination, widely believed to be China. Trade chatter suggests China could purchase another 3 to 4 million metric tons ahead of President Xi’s expected US visit in late September. Still, after gaining more than 50 cents over the past week, November soybeans are nearing overbought conditions. Resistance stands at $12.50, followed by the late-July high at $12.56½.

Soybean oil provided the strongest support within the complex, gaining 136 points to 71.32 cents. Malaysian palm oil also advanced on strength in competing vegetable oils and concerns that El Niño and Indonesia’s B50 mandate could tighten supplies. Soybean meal fell $1.80 to $323.80, while December crush margins strengthened to roughly $2.60 per bushel.

Wheat finished modestly higher, with Chicago September gaining 2½ cents to $6.82¾. Black Sea supply risk remains supportive after Ukrainian wheat rail loadings reportedly fell 77% from last year. However, with prices already sharply elevated, the market may have discounted a meaningful portion of that risk.

Weekly export sales were respectable:

Corn: 232,900 metric tons
Soybeans: 85,000 metric tons
Wheat: 393,700 metric tons, above expectations

Weather remains broadly favorable across the Midwest. Cooler temperatures and a drier pattern should help excessively wet areas dry down, while occasional rainfall continues to benefit the northwestern Corn Belt. Soil moisture remains favorable for late soybean filling, and early harvest-delay concerns should ease by the beginning of September. The Delta and portions of Alabama remain the main trouble spots, with persistent heat and dryness threatening additional crop stress.

Bottom line: Crop Tour results and export demand continue to support the grain complex, but corn is becoming crowded and soybeans are struggling to extend gains. The bulls now need additional evidence of lower yields or stronger Chinese demand to justify the next leg higher.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Thu, 20 Aug 2026 11:52:01 GMT

Treasury’s “QE-Lite” Offers Relief, but Does Not Fix the Bond Market

Treasury Secretary Scott Bessent gave global bond markets a much-needed circuit breaker Wednesday, but whether that relief lasts is another question entirely.

The catalyst was an unexpected announcement that the Treasury will at least double the size of its liquidity-support buybacks for longer-dated government debt. Beginning September 9, the maximum purchase size for operations in the 10-to-20-year and 20-to-30-year sectors will increase from $2 billion to at least $4 billion.

The reaction was immediate. Long-term Treasury yields fell sharply, the yield curve flattened, equity futures rallied and gold broke higher. The relief quickly spread overseas, pulling long-term yields lower across Europe, Japan and Australia.

Markets are calling the program “QE-lite,” but what exactly does that mean?

What Is QE-Lite?

Traditional quantitative easing occurs when the Federal Reserve creates new bank reserves and uses them to buy Treasuries or mortgage-backed securities.

That accomplishes three things:

Expands the Fed’s balance sheet
Injects additional liquidity into the financial system
Removes interest-rate risk from private investors

Treasury’s new buyback program is not technically QE because the Fed is not creating money and its balance sheet is not expanding.

Instead, Treasury will purchase older, less-liquid, long-dated bonds from dealers and investors. Those securities are then retired, but Treasury must finance the purchases through its existing cash or by issuing additional government debt.

If Treasury funds the buybacks by issuing more short-term bills, the transaction looks something like this:

Treasury sells short-term bills and uses the proceeds to buy back long-term bonds.

The total government debt does not necessarily decline. Its maturity composition changes.

Long-duration bonds are removed from the market and replaced with short-term securities that behave more like cash. Private investors are left holding fewer bonds that carry significant interest-rate risk and more highly liquid bills with limited price volatility.

That is why the policy resembles a Treasury-led version of Operation Twist.

Why It Can Behave Like QE

Although the plumbing is different, the market effects can overlap with traditional QE.

By becoming a larger buyer of long-dated securities, Treasury:

Creates additional demand for older bonds
Improves liquidity in off-the-run Treasury issues
Reduces the duration private investors must absorb
Helps lower the term premium embedded in long-term yields
Gives dealers a reliable outlet for difficult-to-sell inventory
Potentially eases financial conditions

This matters because long-term Treasury yields influence mortgage rates, corporate borrowing costs, equity valuations and broader credit conditions.

Lower long-term yields reduce the discount rate applied to future corporate earnings. That tends to benefit technology and other long-duration growth stocks. It can also support gold if investors interpret the move as a step toward financial repression or debt monetization.

That does not mean Treasury is printing money. It means Treasury is changing the type of debt the private market must hold in a way that can produce some QE-like effects.

Why Is Treasury Doing This Now?

The official explanation is liquidity support.

Treasury has consistently received considerably more offers of long-dated securities than it was authorized to purchase. Investors and dealers have effectively been lining up to sell older bonds back to the government.

That suggests parts of the long-end Treasury market have become increasingly difficult to trade without meaningfully moving prices.

The timing, however, suggests there is more to the decision.

Thirty-year Treasury yields had reached their highest levels in roughly two decades, increasing government borrowing costs and tightening financial conditions across the economy. At the same time, the market is being asked to absorb enormous amounts of government debt alongside a surge in corporate issuance connected to the AI infrastructure buildout.

The announcement therefore signals that Washington is becoming increasingly uncomfortable with the long end’s continued selloff.

Treasury may describe the program as liquidity management, but the market will naturally view it as an attempt to prevent elevated yields from turning into a disorderly Treasury-market event.

A Circuit Breaker, Not a Cure

The question is whether Treasury can reverse the bond selloff or merely interrupt it.

Bloomberg reports that several major investors remain skeptical. Franklin Templeton continues to hold an underweight position in long-maturity bonds, while strategists at Barrenjoey Markets and Nomura see the announcement as a temporary circuit breaker rather than the beginning of a lasting bond rally.

Their argument is straightforward: the buybacks do not eliminate the fundamental pressures driving long-term yields higher.

Those pressures include:

Large fiscal deficits
Growing government debt
Persistent inflation
Oil-related inflation risk
Heavy sovereign issuance
Expanding corporate borrowing tied to AI investment

Treasury can reduce the amount of duration immediately available in certain parts of the market, but it cannot eliminate the government’s overall financing requirement.

The money used for the buybacks must ultimately come from Treasury cash, taxes or additional borrowing. If Treasury issues more bills to fund the purchases, it has altered the maturity profile of the debt without meaningfully reducing the debt itself.

That makes the policy potentially powerful in the short term but much less certain over a longer horizon.

Why the Dollar Could Weaken

The program may also place downward pressure on the dollar.

Long-term yields normally rise until investors are sufficiently compensated for inflation, fiscal risk and duration exposure. If Treasury intervention prevents bond prices from falling far enough to generate that additional yield, part of the adjustment may instead occur through the currency.

In other words, foreign investors could receive less yield compensation while accepting the same fiscal and inflation risks. A weaker dollar would then help make US assets cheaper for overseas buyers.

The dollar-negative case strengthens if:

Treasury increasingly relies on bills
Long-term yields remain artificially contained
The Fed does not offset the resulting easing in financial conditions
Investors view the program as the beginning of broader yield management

However, the dollar response is not automatic. If the Fed keeps short-term interest rates higher to counteract Treasury’s easing impulse, the yield support at the front end could limit the currency’s decline.

Why Gold Likes It

Gold’s rally reflects more than the initial decline in yields.

The announcement raises the possibility that policymakers are becoming less willing to tolerate market-clearing interest rates when those rates create stress for the government’s financing needs.

That is the broader meaning of financial repression: policies that encourage or pressure investors to finance government debt at yields that may not fully compensate them for inflation and fiscal risk.

Gold benefits if investors believe the eventual solution to rising debt will involve:

Lower real interest rates
Currency depreciation
Higher inflation
Additional liquidity support
More direct efforts to contain government borrowing costs

Treasury’s buybacks are not full-scale debt monetization, but they move the policy discussion in that direction.

What Happens Next?

The market will now focus on three questions.

First, how will Treasury finance the purchases?

If buybacks are paired with increased bill issuance, the program becomes a clearer duration swap. That would strengthen the comparison to Operation Twist and potentially provide more support to long-dated bonds.

Second, will the Federal Reserve respond?

Removing duration and lowering long-term yields eases financial conditions. If the Fed believes that easing is inconsistent with its inflation objective, it may keep short-term rates higher for longer.

That would create a policy tug-of-war: Treasury trying to contain the long end while the Fed maintains pressure at the front end.

Third, what happens after November 4?

The increase is currently scheduled to remain in place through the next quarterly refunding. An extension or expansion would suggest Treasury is moving toward a more permanent yield-management strategy.

If the program expires and the underlying supply pressures remain, the long-end selloff could quickly resume.

Bottom Line

Treasury’s QE-lite program does not create new money, reduce the federal deficit or eliminate the government’s borrowing needs.

What it does is remove some long-duration debt from private hands and potentially replace it with short-term bills. That improves liquidity, reduces duration risk and can temporarily push long-term yields lower.

The immediate effect is supportive for Treasuries, equities and gold, while leaning negative for the dollar. But the longer-term bond outlook remains challenged by heavy issuance, sticky inflation and deteriorating fiscal arithmetic.

Bessent has installed a circuit breaker in the Treasury market. He has not removed the forces overloading the circuit.

Grain Desk: Crop Tour Results Keep Bulls in Control

Grain markets finished broadly higher Wednesday as disappointing Pro Farmer Crop Tour results added fuel to the post-WASDE rally. Corn gained 5 to 10 cents, soybeans rallied 11 to 20 cents and wheat finished 10 to 16 cents higher.

Crop Tour Supports Corn and Soybeans

Nebraska corn yield potential was estimated at 163.61 bushels per acre, well below last year’s 179.50 bpa and the three-year tour average of 173.32. Nebraska soybean pod counts were also below both last year and the three-year average.

Indiana produced a similar result. Corn yield potential came in at 183.54 bpa, below last year’s 193.82 and the three-year average of 187.42. Soybean pod counts were also lower than both comparisons.

The results do not guarantee smaller final USDA yields, but they reinforce the market’s growing concern that the national crop may not be as large as the August balance sheet suggested.

Corn Extends Post-WASDE Rally

Corn closed higher for the fourth time in six sessions, with December futures now nearly 40 cents above the pre-WASDE level. The short and intermediate trends remain higher, with resistance at the May high of $5.06 1/2 followed by the contract high at $5.12 1/2.

Cash corn was mostly steady, although nearby Gulf bids weakened. August CIF corn fell 10 cents to +80U, while September slipped 5 cents to +95U. The September-December spread widened to a record 25 1/2-cent carry, showing that nearby physical supplies remain available despite improving futures sentiment.

Weekly ethanol production fell 28,000 barrels per day to 1.089 million, although output remained 1.6% above last year. Ethanol stocks increased to 25.121 million barrels, while gasoline demand dropped to 8.689 million barrels per day. The ethanol numbers were not especially supportive, but crop concerns remained the stronger market driver.

Soybeans Lead as Spreads Firm

Soybeans rallied 11 to 20 cents, with nearby contracts outperforming deferred futures. November-July narrowed to a 25 1/2-cent carry from 32 1/2 cents Tuesday, while the July-November transition remains deeply inverted.

The firmer spreads suggest the market is beginning to place greater value on nearby supplies as crop uncertainty increases. November soybeans now face their most important resistance at the contract high of $12.56 1/2.

Domestic soybean basis was mixed. Decatur’s nearby bid improved 8 cents to +40U, while September bids weakened at several processors. Gulf soybean bids were slightly softer, with August at +95X and October at +105X.

USDA flashed another 136,000 tonnes of new-crop soybeans to China Wednesday. That followed the previously announced 641,000 tonnes, providing additional confirmation that Chinese demand is beginning to appear.

Soybean Oil Remains the Wild Card

Soybean oil finished only modestly higher despite strength across the broader vegetable-oil complex. Interior and Gulf basis increased another 50 points, while fourth-quarter physical offers remain limited amid uncertainty surrounding California regulations.

Palm oil extended its rally on developing El Niño concerns and tightening Southeast Asian production prospects. September Malaysian palm oil is now trading at a $16-per-ton premium to Argentine soybean oil after sitting at a $52 discount only one week ago.

RIN values also strengthened as the September 1 compliance deadline approaches. Higher RIN prices, firm physical basis and continued palm oil strength remain supportive for soybean oil, although uncertainty surrounding small-refinery exemptions could keep volatility elevated.

Wheat Benefits From Dollar Weakness

Wheat rallied 10 to 16 cents as Treasury’s long-end bond intervention pressured the dollar to its lowest level since late May. Continued Black Sea tensions added support, although wheat remains contained within its broader trading range.

Taiwan purchased 97,200 tonnes of US wheat for late October and early November shipment, while Jordan bought 60,000 tonnes for first-half October shipment.

Weather Remains Mostly Favorable

Midwest conditions remain broadly favorable. Drier weather should help excessively wet areas, while periodic rainfall supports the northwestern Corn Belt. Mild temperatures and adequate soil moisture should also favor late soybean filling.

The primary concern remains the Delta and portions of the Southeast, where persistent heat and limited rainfall could increase crop stress and reduce yields. Brazil should remain mostly dry, supporting safrinha corn and cotton harvest, while some Argentine winter-wheat areas still need additional moisture.

Bottom Line

The grain complex has shifted into a more constructive technical posture, led by disappointing Crop Tour results, improving soybean demand and a weaker dollar. However, the market is already carrying sizable managed-money length, estimated near 289,000 corn contracts and 140,000 soybean contracts.

The trends remain higher, but with speculative length building quickly and September options expiring Friday, traders should expect increased volatility around the Crop Tour results and weekly export sales.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Tue, 18 Aug 2026 12:01:38 GMT

When Rates Start to Bite

The long end is becoming increasingly difficult for equities to ignore.

The 30-year Treasury yield has pushed to roughly 5.33%, its highest level since 2007, while global long-duration yields are also moving sharply higher. The pressure is increasingly being driven by real yields and term premium, not simply inflation expectations.

Walk-Squawk Morning Wire

Walk-Squawk — Mon, 17 Aug 2026 12:22:03 GMT

Walk-Squawk Morning Wire

Tech Reclaims the Lead as AI Becomes a Capital Markets Story

U.S. equity futures are starting the week with a modest risk-on tone, led once again by technology.

As of writing, Nasdaq futures are up roughly 155 points, while S&P 500 futures are only nine points higher. The gap reinforces the return of tech leadership after the Nasdaq’s sharp rebound from its late-July lows.

Outside equities, markets are considerably quieter. The 30-year Treasury is essentially unchanged, while WTI crude is up just five cents near $82.45 per barrel. Corn, soybeans and wheat are all slightly higher after an interesting Friday close in which the grain complex remained firm without producing a decisive breakout. Soybean oil continues to stand out, extending its recent run.

The broader message this morning is that risk appetite remains intact, but it is highly concentrated in technology and the AI trade.

Tech Is Back, but Positioning Is Lighter

Nasdaq futures are pushing higher after the NDX rallied approximately 10% from its late-July low near the 200-day moving average. The index has since reclaimed its 50-day average and broken above the short-term downtrend that controlled the July pullback.

The interesting part is that the rebound has not been accompanied by an aggressive positioning chase.

Non-dealer exposure has been reduced, technology funds recently experienced their largest outflows in seven weeks, and plenty of investors still appear to be waiting for a pullback. That dip has yet to arrive.

This creates an awkward setup. Chasing tech after a 10% rally offers less attractive risk-to-reward, but lighter positioning means the market could continue squeezing higher if sidelined investors are forced back in.

For NDX, support around 29,500 remains the first important technical test. Above that level, the market can continue pressing toward its all-time highs. A decisive break below 29,500 would be the first sign that the rebound is beginning to lose momentum.

Nasdaq volatility has also reset sharply. With VXN substantially lower, calls offer a defined-risk way for traders who missed the rebound to regain exposure, while puts have become more affordable protection for investors sitting on large technology gains.

AI Spending Continues to Accelerate

The fundamental AI story has not broken.

Anthropic reportedly told prospective investors that second-quarter revenue increased at least fourteenfold from the same period last year, providing another indication that demand for generative AI remains strong. Corporate adoption is also accelerating as token costs fall and companies receive more useful output for every dollar spent.

That combination is helping AI-related stocks reassert their leadership following July’s rotation into more economically sensitive areas.

However, the AI story is moving beyond models, chips and software. It is increasingly becoming a capital markets story.

Microsoft, Alphabet, Amazon and Meta continue to raise already ambitious infrastructure budgets as demand for computing capacity exceeds available supply. Morgan Stanley now estimates that combined capital expenditures for the four largest hyperscalers could increase another 57% in 2027 compared with 2026.

The companies behind this spending believe AI investments can eventually generate returns on invested capital of 25% or more. The problem is timing.

Data centers, servers, chips and power infrastructure must be financed and constructed before the resulting AI products generate enough revenue to cover those investments. That delay is pressuring near-term cash generation, with analysts continuing to reduce 2027 free-cash-flow estimates for the largest hyperscalers.

The result is a widening financing gap.

Credit Markets Are Funding the AI Buildout

Public and private credit markets are increasingly being used to bridge that gap.

This summer, hyperscaler credit spreads widened as debt issuance accelerated. Higher-quality issuers traded approximately 35 basis points wider on the year at one point, while spreads for lower-rated borrowers widened closer to 50 basis points before recovering during the past two weeks.

The movement was most pronounced in unsecured corporate bonds. Investors purchasing those bonds are exposed to a broad range of risks surrounding the AI cycle, including execution, demand, competition and the eventual return on enormous capital investments.

By comparison, data-center asset-backed securities and commercial mortgage-backed securities held up better. Those structures are generally supported by data centers that have already been built, powered and leased, creating more visible contractual cash flows.

That distinction will become increasingly important.

Companies such as Microsoft, Alphabet, Amazon, Meta, Nvidia and Broadcom have strong balance sheets, high credit ratings and enough expected profitability that modestly higher borrowing costs are unlikely to slow their spending.

Lower-rated borrowers face a different reality. Oracle, data-center developers, former bitcoin miners and certain REITs have less balance-sheet flexibility. For these companies, wider credit spreads can materially increase project costs and may eventually limit how aggressively they can expand.

The AI buildout may therefore continue, but capital will not be distributed evenly.

The Next Financing Wave

The first phase of AI infrastructure spending focused heavily on acquiring land and constructing data-center shells. The next phase is expected to move deeper into the value chain, targeting servers, chips and energy infrastructure.

These assets are well suited for specialized, asset-level financing, which should create a larger role for private capital.

Recent examples include Nvidia’s compute-infrastructure financing platform and a reported $35 billion Broadcom-backed chip-financing transaction. Future deals may also include credit support, residual-value guarantees and other backstops from the strongest companies in the AI ecosystem.

This matters because access to capital could eventually become a competitive advantage. The companies capable of funding infrastructure cheaply and supporting outside financing vehicles may secure computing capacity that weaker competitors cannot afford.

AI is no longer only a race to develop the best model. It is becoming a race to finance the chips, data centers and electricity required to operate those models at scale.

Commodities Begin the Week Firm

The commodity complex is comparatively quiet this morning.

WTI is holding near $82.45 as traders continue monitoring the prolonged Iran conflict and disruptions surrounding the Strait of Hormuz. Crude is not extending its geopolitical premium this morning, but the absence of a diplomatic resolution should keep headline risk elevated.

Grain futures are slightly higher following a constructive close Friday. Corn, soybeans and wheat all finished the week with a modest bid and have not surrendered those gains in early trade.

Soybean oil remains the strongest part of the agricultural complex. Tightening renewable-fuel requirements, elevated RIN values and expectations for stronger domestic biofuel demand continue to support the market. Litigation surrounding the EPA’s 2026 and 2027 blending mandates could eventually alter the outlook, but any meaningful regulatory changes are unlikely to arrive quickly.

For now, the grain complex is entering the week firm, but traders will need to see whether Friday’s buying develops into sustained follow-through.

Week Ahead

The health of the U.S. consumer moves back into focus this week with earnings from Walmart and Home Depot. Investors will be watching for signs that slower hiring, elevated borrowing costs and renewed inflation concerns are beginning to affect household spending.

The Federal Reserve’s July meeting minutes will also be released. Recent softer economic data has reduced the urgency for additional near-term tightening, but the bond market remains sensitive to inflation, heavy government borrowing and persistent fiscal concerns.

The early-week setup is therefore constructive but uneven.

Technology is leading, volatility has collapsed, positioning remains lighter than the price action suggests and the underlying AI investment cycle continues to expand. At the same time, the enormous financing requirements behind that expansion are beginning to separate the strongest balance sheets from the rest of the field.

The flow of innovation still matters. Increasingly, however, the flow and cost of capital may determine who ultimately wins.

Ag COT: Managed money reduced bullish exposure across the grain complex, cutting net longs in corn by 15,176 contracts and soybeans by 24,104, while expanding its net short in Chicago wheat to 31,401 contracts. Soybean oil was the exception, with funds maintaining a sizable 80,922-contract net long, reinforcing its position as the strongest leg of the complex.

Weekend Weather: Heavy rain remains the primary domestic concern after parts of central Illinois received 5 to 10 inches, with localized flooding extending into central and southeastern Indiana. Additional rain could threaten roughly one-quarter of the central and southeastern Midwest soybean belt, although the 6-15 day outlook turns drier and stays generally mild, limiting broader crop stress. Internationally, dryness is expanding across southeastern Europe and the Black Sea, increasing late-season stress on corn, while cooler and wetter conditions in central and western Europe are unlikely to materially improve yields.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Fri, 14 Aug 2026 11:38:57 GMT

Iran/Hormuz Standoff Keeps Oil Risk Elevated

Geopolitical risk is back in focus Friday as the U.S.-Iran standoff shows little sign of easing, while renewed attacks on regional energy infrastructure are keeping a floor underneath crude.

Defense Secretary Pete Hegseth said the U.S. Navy is capable of maintaining its blockade of Iranian ports indefinitely, rotating ships through the region as Washington looks to increase economic pressure on Tehran. Meanwhile, traffic through the Strait of Hormuz remains well below normal as negotiations over reopening the waterway remain stalled.

Tensions were compounded after Yemen’s Iran-aligned Houthis claimed another drone attack on Saudi Aramco’s Jazan refinery, using two drones. Saudi officials had not confirmed the latest strike at the time of reporting.

The broader concern is that Iran increasingly appears prepared to drag the conflict out rather than seek a quick resolution. Tehran has reshuffled parts of its security leadership toward more hard-line figures, while Iranian officials have openly discussed a strategy of attrition designed to increase the political and economic costs for Washington.

That raises the probability that Hormuz remains a persistent market risk rather than a short-lived geopolitical shock.

Crude is responding this morning. Brent is back near $88.50 while WTI is around $82.80, with oil positioned for another weekly gain.

Market Takeaway

The bigger macro issue remains inflation. Higher-for-longer energy prices threaten to work their way back into headline inflation, transportation costs and eventually broader goods prices.

For markets, that creates a difficult combination:

Iran escalation → higher crude → renewed inflation pressure → less flexibility for the Fed.

So far equities have largely looked through the conflict, but another sustained move higher in crude could start challenging the market’s relatively benign inflation outlook.

Nvidia Wants to Turn AI Compute Into an Asset Class

The other developing macro story is the continued financialization of the AI infrastructure boom.

Nvidia announced partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR designed to mobilize more than $500 billion of third-party capital toward AI infrastructure. Nvidia describes the goal as turning AI compute and “AI factories” into a scalable, investable infrastructure asset.

The bullish argument is straightforward.

More financing → more data centers → more GPUs → more Nvidia demand.

It also shifts much of the capital burden away from Nvidia itself and toward private-capital and institutional investors.

But there is a longer-term risk.

The easier AI infrastructure becomes to finance, the greater the possibility that capital spending eventually outruns actual demand for compute.

The concern isn’t that today’s AI demand suddenly disappears. It’s that efficiency gains could dramatically increase the effective supply of compute at the same time enormous amounts of new capacity are coming online.

If models require fewer tokens, GPU utilization improves, workloads become more efficient or enterprises increasingly price AI based on completed tasks rather than token consumption, the amount of hardware needed to deliver the same economic output could fall substantially.

Meanwhile, Nvidia can potentially provide support for as much as 25% of certain financing structures, further improving the economics for lenders and encouraging additional investment.

The SEC has also recently made it easier for some data-center projects to access asset-backed financing, potentially widening the pool of institutional capital available to the sector.

Why It Matters

This doesn’t mean the AI boom is a housing bubble.

But the mechanism is worth watching.

Cheap financing → more capacity → stronger chip demand → more financing → even more capacity.

That feedback loop works extremely well while demand keeps growing.

The eventual stress test comes if AI compute prices fall while data-center borrowers are simultaneously carrying significantly more leverage. At that point, falling GPU collateral values and deteriorating borrower credit quality could become correlated.

For now, markets continue to reward the AI buildout, but AI infrastructure financing is becoming an increasingly important macro-credit story rather than simply a semiconductor story.

Bottom Line

The two big themes heading into Friday are almost opposites:

Energy: constrained supply and geopolitical scarcity are keeping inflation risks alive.

AI: enormous amounts of capital are being deployed to create potentially unprecedented amounts of compute supply.

For equities, the near-term backdrop remains constructive, but oil is probably the more immediate macro risk, while the rapid expansion of AI credit is something worth monitoring as a longer-term vulnerability.

Grain Desk

Grain markets head into Friday with U.S. weather and Black Sea headlines competing for attention, while China continues to slowly add U.S. new-crop soybeans.

Soybeans

Soybeans remain the strongest of the grain complex, with November holding support near $11.65 while rallies toward $12.00 continue to stall. China has been buying U.S. new-crop beans in pieces rather than aggressively, including another USDA flash sale of 125,000 MT for 2026/27. The desk estimates China has secured roughly 7 MMT of an expected 18 MMT of purchases ahead of January 1.

Old-crop export demand remains the softer part of the picture. Weekly soybean sales totaled just 75,100 MT, with cumulative shipments/sales running about 18% below last year. New-crop business is much stronger, with China listed for roughly 1.446 MMT.

Weather is becoming increasingly important. August rainfall has been highly uneven, with parts of the eastern Corn Belt running well above normal while portions of the western Belt remain dry. Longer-range forecasts are beginning to lean hotter and drier across the western Midwest, keeping some weather premium underneath beans during pod fill.

Soybean takeaway: Buyers continue defending breaks, but $12 remains the near-term hurdle. Weather and additional Chinese business are the catalysts needed to force a breakout.

Corn

Corn is consolidating after its post-WASDE move, with December holding the $4.65-$4.70 area. Farmer selling increased following the rally, particularly across the South, while some early harvest activity could begin next week in southern Kansas and Missouri.

Weekly export sales were respectable at roughly 16.2 million bushels old crop and 36 million bushels new crop. Cumulative corn shipments remain a bright spot, running roughly 24% ahead of last year.

Argentina’s crop also remains a factor. Harvest is only 77% complete, well behind last year’s 94.6%, although yields have been strong at 125.2 bu/acre versus 114.7 last year. Argentine production estimates continue to range widely from roughly 64 to 70 MMT.

The bigger question heading into the weekend is U.S. weather. Near-term rainfall remains generally favorable, but the 8-14 day outlook is shifting hotter and drier across much of the Midwest, just as corn moves through late kernel fill.

Corn takeaway: $4.65-$4.70 is the key support zone. A hotter/drier late-August pattern could keep the recent recovery alive, but improving farmer selling and expectations for a large U.S. crop remain overhead resistance.

Wheat

Wheat continues to trade headlines from the Black Sea.

Prices initially broke Thursday after Ukraine proposed a temporary halt to attacks on civilian infrastructure, which could potentially reduce attacks on grain infrastructure and ports and allow more normal Black Sea shipping. The market recovered as traders questioned whether Russia would agree to the proposal.

Weekly U.S. wheat export sales totaled 255,900 MT, on the low side of expectations, with cumulative shipments around 32% behind last year.

Weather outside the U.S. offers some support, with dryness expected to expand across Southeast Europe and the Black Sea, potentially stressing late-filling corn and other crops.

Wheat takeaway: Expect headline-driven trade. Chicago wheat has support around $6.25, but any credible Russia-Ukraine agreement reducing threats to Black Sea grain flows would be bearish.

Weather Desk

The Midwest forecast remains broadly favorable in the immediate window, with rounds of showers expected and limited widespread extreme heat. Areas of South Dakota, Nebraska, northwest Iowa, North Dakota and northwest Minnesota remain the driest portions of the Belt.

The market is increasingly focused on the back end of the forecast, however, where NWS 8-14 day guidance turns warmer and generally drier across much of the Corn Belt.

Bottom Line

Soybeans: China buying + late-summer weather keep support underneath the market. $11.65 support / $12 resistance.

Corn: Strong exports and hotter/drier forecasts are supportive, but producer selling and large-crop expectations cap enthusiasm. Watch $4.65-$4.70.

Wheat: Black Sea headlines dominate. Any real progress toward safer Ukrainian/Russian shipping is bearish; failure to reach an agreement keeps geopolitical premium alive.

Heading into the weekend, weather maps are likely the biggest directional catalyst for corn and soybeans, while wheat remains tied to Russia-Ukraine developments.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Thu, 13 Aug 2026 11:50:47 GMT

Stocks are holding near record highs Thursday morning as investors turn their attention from consumer inflation to the next piece of the inflation puzzle: producer prices.

The setup heading into this morning’s PPI report is considerably calmer than what markets were dealing with only a few weeks ago. Treasury yields are easing, oil has backed away from its recent surge, earnings have generally remained strong, and investors increasingly believe the Federal Reserve may be able to navigate the remainder of the year without delivering another major shock to markets.

S&P 500 futures are modestly higher ahead of the open, while Nasdaq futures are trading closer to unchanged. Treasury prices are also catching a bid, pushing the 10-year yield down toward 4.67%.

For now, the market appears willing to stay near the highs while it waits for another read on inflation.

PPI Is the Next Test

July’s Producer Price Index will be released at 7:30 AM CT, with economists looking for headline producer prices to rise roughly 0.2% from June.

PPI rarely receives the same attention as CPI, but today’s report matters because investors are trying to determine whether inflation pressures are continuing to cool underneath the surface or whether higher input costs are beginning to work their way back through the economy.

That question has become increasingly important as the market debates what the Federal Reserve will do at its September meeting.

A softer PPI report would reinforce the idea that inflation remains manageable and could allow the Fed to remain patient. A hotter print, however, would quickly put upward pressure back on Treasury yields and potentially revive concerns that policymakers may need to keep monetary policy tighter for longer.

That makes the bond market an important part of today’s story.

Later this afternoon, the Treasury will sell $25 billion of 30-year bonds in what could be one of the highest-yielding long-term Treasury auctions in roughly 25 years. With long-end yields already elevated, investors will be watching demand closely.

Even a relatively benign PPI report could be overshadowed if the auction struggles and yields begin pushing higher again.

Oil Provides Some Relief

Energy markets are at least offering investors some help this morning.

Brent crude has fallen back toward $87 per barrel after jumping roughly 12% over the previous six sessions.

The geopolitical premium surrounding Iran and the Strait of Hormuz has not disappeared, but the immediate move higher has cooled enough to take some pressure off the inflation narrative.

That matters because much of the market’s increasingly optimistic outlook for the Fed assumes oil prices eventually stabilize or move lower.

If crude resumes its surge, that assumption becomes considerably more difficult.

The Market Has Gone From Fear to Comfort

Perhaps the more interesting shift has occurred beneath the surface of the equity market.

July was an uncomfortable month for many investors. Fundamental long/short funds suffered one of their worst monthly drawdowns in several years, positioning was reduced, the AI trade experienced a sharp unwind, and concerns surrounding the Fed, long-term Treasury yields and geopolitics were elevated.

Three weeks later, that wall of worry has largely faded.

Goldman Sachs notes that the second-quarter earnings season has been exceptionally strong. With roughly 90% of the S&P 500 having reported, 64% of companies beat consensus earnings expectations by at least one standard deviation, one of the strongest beat rates on record.

But there is an important catch.

Stocks are barely being rewarded for those earnings surprises.

Historically, companies producing unusually strong earnings beats have meaningfully outperformed the broader market the following session. This quarter, that reaction has been considerably weaker.

In technology, the response has been even more striking, with major earnings beats actually underperforming the S&P 500 on the following day.

That does not necessarily signal that the bull market is ending.

It does suggest that expectations have risen substantially.

Good news is still good news, but investors are increasingly asking how much of that good news is already reflected in prices.

AI Is Becoming a Stock Picker’s Market

That same transition is happening inside the AI trade.

During the July selloff, nearly every corner of the AI complex was sold together. Semiconductor names, memory, power, data centers and networking stocks all moved lower as investors reduced exposure.

The rebound has looked much different.

Optical networking, data centers and neocloud providers have been among the strongest areas, while memory and AI power names have lagged. Goldman says investors are increasingly re-engaging with AI on a theme-by-theme basis rather than treating the entire complex as one trade.

That is an important evolution.

The broad AI thesis remains intact, but the easy phase where nearly everything associated with artificial intelligence moved higher together appears to be fading.

Investors are now paying closer attention to earnings durability, valuations, capital spending, memory pricing and which companies will actually benefit as AI moves from infrastructure buildout toward broader adoption.

The Bottom Line

The backdrop remains constructive, but the market is entering today’s PPI report from a very different position than it occupied only a few weeks ago.

Investors have rebuilt exposure. Earnings have been strong. Stocks are back near record highs. Expectations for the Fed have become considerably more optimistic.

That leaves less room for positive surprises.

A soft PPI print and a strong 30-year Treasury auction could keep the current rally intact and allow investors to continue rotating into areas beyond the traditional AI leaders.

But with markets already pricing a fairly comfortable macro outcome, an upside inflation surprise or another sharp move higher in long-term yields could produce a much larger reaction.

The bull case remains alive.

The difference now is that the market may require increasingly better news to keep pushing higher.

The August WASDE gave the grain market plenty to digest, but the biggest story was clearly corn.

USDA raised acreage more aggressively than expected, but that bearish surprise was largely offset by a lower-than-expected yield and stronger export demand. The end result was a tighter corn balance sheet than the trade had been looking for, helping spark a notable rally following the report. Soybeans were much closer to expectations, while wheat’s strength had more to do with Black Sea headlines than the USDA numbers themselves.

Corn: More Acres, Lower Yield, Tighter Stocks

The corn report was a tug-of-war between acreage and yield.

USDA raised 2026 corn planted acreage by nearly 1.4 million acres to 96.73 million, with harvested acreage moving up to 88.592 million acres. That was a clearly bearish adjustment on the supply side and reflected the incorporation of updated FSA acreage data.

But USDA offset much of that acreage increase by cutting its national yield estimate to 180.7 bushels per acre, well below the average trade estimate of 182.3. That put total production at 16.013 billion bushels, still 98 million bushels above the average trade guess because of the larger harvested area.
The more important surprise came on the demand side.

USDA finally increased old-crop corn exports by 75 million bushels to 3.400 billion, bringing the estimate more in line with the pace of actual export business. That dropped 2025/26 ending stocks to 1.945 billion bushels, below the trade estimate of 2.0 billion.
USDA then raised 2026/27 exports by another 75 million bushels to 3.275 billion, helping pull new-crop ending stocks down to 1.653 billion bushels from 1.790 billion last month. The trade had been looking for 1.724 billion.

That tighter stocks figure was the number the market ultimately cared about.

The next question is whether the 180.7 yield can hold.

StoneX notes that when crop conditions remain steady or improve from early August through harvest, final corn yields have historically had a strong tendency to finish at or above USDA’s August estimate. Recent rains across much of the Corn Belt, combined with forecasts for additional moisture and mostly average temperatures, suggest some upside yield risk remains if crop conditions improve.

So while the August report tightened the balance sheet, the weather market is far from finished.

Soybeans: Bigger Crop, Few Surprises

Soybeans were much quieter.

USDA raised soybean planted acreage by 1.4 million acres to 86.765 million, with harvested acreage increasing to 85.781 million. The national yield came in at 52.7 bushels per acre, essentially right on market expectations.
That produced a crop of 4.519 billion bushels, 54 million above the average trade estimate and 44 million above the July assumption.

Demand revisions were relatively minor.

Old-crop crush was increased by 5 million bushels, bringing 2025/26 ending stocks down slightly to 325 million bushels. For new crop, USDA increased crush by 30 million bushels to 2.780 billion, but left exports unchanged at 1.660 billion. New-crop ending stocks edged higher to 320 million bushels, compared with the 302 million average trade estimate.
The soybean story now shifts heavily toward August weather.

StoneX points out that since 2000, there have been 11 years when soybean crop conditions held steady or improved from early August into the end of the season. Nine of those years saw final yields finish at or above USDA’s August estimate, and seven produced increases of 1.1 to 4.4 bushels per acre.

With rains improving across much of the belt and a favorable forecast extending through the next couple of weeks, the market will have to continue pricing the risk of a larger crop.

Wheat: USDA Takes a Back Seat to the Black Sea

Wheat’s August WASDE was almost a non-event.

USDA trimmed all-wheat production by just 5 million bushels to 1.531 billion, carrying that directly through to ending stocks, which fell to 717 million bushels. Demand was left unchanged.

Instead, the strength in wheat came from geopolitics.

Prices rallied alongside reports of heavy Ukrainian attacks on Russian port infrastructure at Novorossiysk, once again reminding the market how quickly Black Sea risk can inject premium into wheat.

Even so, StoneX remains cautious about translating Black Sea disruptions into a major U.S. export story. U.S. wheat remains relatively uncompetitive against other major exporters, and current export commitments are already among the weakest of the past 17 years.

Global supplies also remain comfortable. USDA sees 2026/27 world wheat ending stocks outside China at 153.1 MMT, only modestly below last year and still historically large.

Bottom Line

The August WASDE gave corn the strongest fundamental story.

USDA found more acres, but the lower yield and stronger export outlook tightened both old- and new-crop stocks enough to give bulls something meaningful to work with.

Soybeans were closer to neutral, with larger acreage and production offsetting modestly stronger crush demand. Wheat remains more headline-driven than balance-sheet-driven, with Black Sea risk supporting prices even as global supplies remain relatively comfortable.

From here, the focus shifts right back to weather.

For corn and especially soybeans, the next several weeks will determine whether USDA’s August yields become the floor, or whether improving crop conditions push production estimates higher into September and October.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Wed, 12 Aug 2026 11:45:10 GMT

MACRO DESK: CPI Takes Center Stage as Oil, Rates and Geopolitics Complicate the Fed Debate

Markets head into Wednesday with July CPI firmly in focus after last week’s weak payroll report shifted the Fed debate back toward the labor side of the mandate. Equity futures are holding firmer into the release, led by technology, but the backdrop remains complicated by rising crude prices, renewed tension around the Strait of Hormuz and a Treasury market that remains highly sensitive to any upside inflation surprise.

The base case is for a relatively benign inflation report.

Headline CPI is expected to rise 0.1% month over month, rebounding from June’s 0.4% decline, while the annual rate is expected to ease to 3.4% from 3.5%. Core CPI is expected to increase 0.2% on the month, with the year-over-year rate slowing to 2.5% from 2.6%.

The distribution of forecasts is fairly tight around that 0.2% core reading, making the bigger question whether underlying inflation continues to cool or shows signs of becoming sticky again.

Goldman Sachs is essentially in line with consensus, forecasting a 0.19% increase in core CPI and just 0.05% on headline, helped by lower energy prices. Shelter remains one of the most important components to watch, with Goldman expecting another relatively benign month for rent and owner-equivalent rent. Used vehicle prices are expected to rise modestly, while softer auto insurance and hotel prices should provide some offset.

The shelter slowdown remains critical to the broader disinflation story. If rents and OER continue cooling, it gives the Fed evidence that one of the stickiest parts of inflation is finally moving in the right direction.

There are still pockets of potential pressure. Pantheon expects core goods inflation to strengthen, with consumer electronics and hardware beginning to reflect higher input costs. That ties into a broader concern that rising semiconductor, memory and industrial-metal prices tied to the AI investment boom could eventually begin feeding into consumer prices.

For now, however, softer services and lower energy prices are expected to keep the overall July print contained.

Why CPI Matters More After Payrolls

Last week’s weak employment report gave the Fed another reason to be cautious about tightening further.

The problem is that inflation remains above target.

That leaves policymakers balancing two increasingly conflicting signals:

Weakening labor market + cooling inflation = room for patience.

Weakening labor market + sticky inflation = a much harder policy problem.

A soft CPI print would reinforce the argument that the Fed can remain sidelined while the labor market slows. A hotter print would quickly reopen the tightening debate and increase concerns that the economy is drifting toward a less comfortable combination of weaker growth and persistent inflation.

Today’s report will not determine the September FOMC decision by itself. Policymakers will still see the August jobs report, August CPI and August PPI before the September meeting. But this morning’s print will set the starting point for that debate.

The most important number remains core CPI month over month.

JPMorgan sees 0.20%-0.25% as the most comfortable zone for equities, while 0.15%-0.20% would be more clearly dovish and likely push Treasury yields lower.

A print between 0.25%-0.30% would be viewed as hawkish and could pressure stocks as expectations for additional tightening rise.

Anything above 0.30% would represent the genuine risk scenario, with JPMorgan estimating the S&P could fall roughly 1.5%-2.5% as both yields and Fed expectations reprice.

Options are pricing roughly a 0.9% move in the S&P 500, slightly below the implied moves surrounding several recent CPI releases.

The reaction could also be asymmetric. A soft report largely confirms what investors are beginning to expect after weak payrolls and cooling shelter. A hot report would challenge that entire narrative.

That makes the Treasury market especially important this morning.

The 2-year yield will tell us how aggressively markets are repricing the Fed, while the 10-year will provide the broader signal around inflation, growth and fiscal concerns.

If both yields move sharply higher following CPI, that would be the more difficult setup for equities, particularly technology and other long-duration assets.

Hormuz Keeps Energy Inflation Risk Alive

Adding another layer to the inflation debate, hopes for a quick resolution in the Strait of Hormuz have faded again.

President Trump said the U.S. has “total control” over the Strait and warned that further Iranian action would be met with force, while Iran continues to demand an end to the war and the release of frozen assets as part of any broader agreement. Former U.S. Deputy Secretary of State Wendy Sherman described negotiations as a stalemate.

That matters because roughly one-fifth of global oil and LNG flows moved through Hormuz before the conflict. Some tanker traffic continues, but the waterway remains far from normalized.

Brent crude traded above $89 per barrel, extending its rally into a sixth session.

For the Fed, the transmission is straightforward:

Hormuz risk → higher crude → firmer inflation expectations → less room to ease or remain patient.

That creates an important distinction for today’s CPI reaction. A soft print alongside stable or lower crude would reinforce the disinflation narrative. A hot print with oil continuing toward $90 would be considerably more problematic.

AI Keeps Tech Supported, But Rates Still Matter

Technology remains the strongest pocket of the market ahead of the report.

Nasdaq 100 futures were higher as strong results from CoreWeave and Super Micro reinforced the view that AI infrastructure demand remains healthy.

That provides support for the broader AI trade, but elevated financing costs remain an important counterweight. Strong earnings can keep the growth narrative intact, but they do not eliminate the valuation pressure created by higher Treasury yields and widening corporate financing costs.

That means today’s inflation report matters disproportionately for tech.

If CPI pushes rates lower, strong AI earnings have room to drive valuations higher.

If CPI sends long-end yields sharply higher, the cost-of-capital story can quickly overpower the earnings story.

Yen Near 160 Adds Another Rates Risk

The Japanese yen is also hovering near the psychologically important 160 per dollar level, keeping intervention risk alive.

Any renewed intervention from Japan could have implications beyond foreign exchange, particularly if it creates additional volatility in global bond markets and Treasuries.

That makes the long end of the U.S. curve one of the most important cross-asset indicators to watch today.

Bottom Line

The setup into CPI is relatively straightforward.

The market expects a fairly ordinary July inflation report after two much larger macro surprises.

A 0.2% core print keeps the Goldilocks narrative intact. Anything softer strengthens the argument that the Fed can remain patient. A core reading above 0.25%, and especially above 0.30%, would quickly revive the tightening debate and put rates back in control of the tape.

But CPI is not happening in isolation.

Hormuz remains an upside risk to oil and inflation expectations. AI earnings continue supporting technology. The yen is again testing intervention territory. And the Treasury market remains vulnerable to any sign that inflation is proving harder to kill than expected.

After last week’s weak payroll report, today’s CPI will determine whether markets can continue leaning into slower growth and easier policy expectations, or whether inflation once again complicates the Fed’s path.

GRAIN DESK: August WASDE Preview

All eyes turn to the August WASDE at 11:00 CT, where the biggest focus will be USDA’s first meaningful 2026/27 corn and soybean production estimates rather than the trend-line assumptions used earlier in the season.

For corn, the trade is looking for USDA to trim yield and production from July, but acreage remains the wildcard. StoneX sees the crop near 15.892 billion bushels with an 181.8 bpa yield, versus USDA’s July estimate of 16.0 billion and 183.0 bpa. Recent crop conditions would argue for lower yield potential, but improved August rains could keep USDA relatively conservative with any cut.

The bigger surprise risk may be acreage. USDA used FSA acreage data to make an unexpected upward corn acreage revision last August, and that same risk exists again this year.

For soybeans, expectations are for only a modest adjustment. StoneX sees yield around 52.8 bpa and production near 4.456 billion bushels, versus USDA’s current 53.0 bpa and 4.475 billion. Favorable August moisture remains supportive for pod fill and could keep final yield potential near or even above 53 bpa if conditions continue improving.

For wheat, attention will be on spring wheat. StoneX sees “other spring” production around 458 million bushels, below USDA’s July estimate of 475 million, largely due to weaker conditions in North Dakota. Winter wheat is expected to see relatively little change.

Bottom line: the trade is looking for slightly smaller corn and soybean crops, but the real volatility risk is whether USDA surprises on acreage again. Corn yield, harvested acres and the resulting 2026/27 carryout will be the numbers to watch first.

GRAIN DESK: Cash Market Update

U.S. cash markets were mostly steady Tuesday, with soybeans continuing to show the more active basis moves while corn stayed relatively quiet ahead of WASDE.

Corn basis was largely unchanged across the interior. Decatur, IL September improved 5 cents to -10U, while river basis firmed in spots with the Illinois River up 2 cents to -8U nearby and Mid-Miss up 7 cents to -25U. Laddonia, MO weakened slightly.

Soybean basis was more mixed. Sioux City slipped 5 cents to +60X, while Bloomington, IL improved 5 cents, Council Bluffs September gained 10 cents, Fairmont, MN strengthened 10 cents, and Illinois River basis improved 4 cents. Cairo October basis weakened 15 cents.

Soymeal basis remained steady nearby, with September values still carrying some firmness. Cash crush margins remain strong near $3.25/bu, while soyoil basis held steady at the Gulf and interior.

South America

Brazilian soybeans saw some actual trade Tuesday, with September reported around +167U and February around +40H. October basis firmed 3 cents and November gained 1 cent.

Brazilian soymeal was firmer, with September up $4 and October up $3, while soyoil rallied 80-110 points across nearby positions.

Argentina remained largely inactive in physical soybeans, while meal was slightly firmer and soyoil gained roughly 90-120 points. Brazilian corn remained quiet with late-September offered around +128 and no reported bid.

Paraná’s safrinha crop remains in very good shape at 86% good, well above the roughly 50% historical average, although harvest is only 60% complete versus 80% last year and 72% on average.

China

China was the notable demand headline.

Chinese buyers took 23 soybean cargoes last week, up from 21 the previous week. Of those, 18 were U.S. origin and just five were South American, a strong showing for U.S. new-crop demand.

All 23 cargoes were for 2026/27, with 10 Gulf and eight PNW U.S. boats included. China’s total current-crop purchases are estimated near 106.5 MMT, leaving roughly 6.5 MMT to reach USDA’s current 112 MMT import projection.

USDA also flashed another 136,000 MT of soybeans to China for 2026/27, along with 180,000 MT of soybean meal to the Philippines.

Bottom line: U.S. corn basis remains mostly quiet ahead of today’s USDA report, while soybean basis continues to show pockets of strength. South American trade remains relatively subdued, but the standout continues to be China stepping up U.S. soybean coverage, with 18 U.S. cargoes booked last week and another flash sale announced Tuesday.

Weather Update

The U.S. weather outlook remains mostly favorable for finishing corn and especially soybeans, keeping a bearish weather lean in place ahead of WASDE.

World Weather continues to call for repeated showers and thunderstorms across much of the Midwest over the next two weeks with no widespread significant heat expected in the near term. Roughly 75% of the Midwest is expected to see rain Wednesday into Thursday, followed by another broad round Friday through Sunday.

The main problem areas remain the northwestern and west-central Corn Belt, particularly southeast South Dakota, portions of Nebraska, northwest Iowa, eastern North Dakota and northwest Minnesota, where soil moisture remains marginal to short. Upcoming rains should provide some relief and help stabilize yield potential, although earlier stress cannot be completely reversed.

Temperatures are also turning more favorable. Some areas from eastern Kansas and Nebraska into southern Illinois could reach the mid-to-upper 90s early this week, but moisture should limit widespread crop stress. A considerably milder pattern arrives later in the week, with highs generally falling back into the 70s and 80s across much of the belt.

For soybeans, the timing remains particularly favorable. Regular August rainfall combined with limited extreme heat is supportive for pod fill and seed development, helping preserve the possibility of strong yields across the central and eastern Midwest.

The exception remains the Delta and Mississippi, where the next two weeks look considerably drier and hotter. Declining soil moisture is expected to increase stress and could trim dryland soybean and other crop yields as the region moves toward maturity.

In Brazil, drier weather across southern Mato Grosso and much of Paraná should allow the safrinha corn harvest to accelerate. Paraná’s crop remains an impressive 86% good, versus roughly 50% on average, although harvest is only 60% complete versus 72% normally.

Weather bottom line: August weather continues to favor a strong U.S. crop finish, particularly for soybeans. Western drought pockets and the Delta remain concerns, but there is currently no widespread weather threat capable of materially reducing national yield potential, putting even more emphasis on what USDA actually prints for yield and acreage in today’s WASDE.

Walk-Squawk Morning Wire

Walk-Squawk — Tue, 11 Aug 2026 11:46:53 GMT

MACRO DESK: Long-End Rates, AI Credit and Iran Keep Risk Assets on Edge

The new week is opening with a familiar tension across markets: equities remain resilient, but the macro plumbing underneath them is becoming increasingly uncomfortable.

The biggest structural issue remains the long end of the Treasury curve. U.S. debt-service costs have accelerated sharply over the past five years, and without a meaningful shift in fiscal policy, investors continue to demand more compensation to own duration. That leaves long-end yields vulnerable to another push higher into year-end.

The important distinction is that this would not necessarily be the “good” kind of higher yields associated with stronger growth. Instead, it would increasingly reflect concerns around fiscal sustainability, policy credibility and the long-term path of U.S. debt.

That matters for stocks because higher long-end rates feed directly into corporate financing costs, valuation pressure and credit spreads, with technology arguably the most exposed sector given the enormous capital requirements behind the AI buildout.

AI Is Becoming a Credit Story

Nvidia’s reported push toward a $500 billion financing framework for AI infrastructure is the latest reminder that the AI trade is no longer just about chips, earnings growth and capex.

It is increasingly about who finances the buildout and at what cost.

Five-year Nvidia CDS reportedly widened toward 77.5 basis points Monday, even as broader investment-grade spreads remained relatively contained. Oracle has already provided the clearest example of how aggressive AI financing can eventually show up in credit, and Nvidia’s gradual spread widening suggests investors are beginning to pay closer attention to the amount of leverage, structured financing and interconnected capital commitments being created around the sector.

That does not mean the AI trade is breaking.

But it does mean the next phase may be more complicated than simply rewarding every new spending announcement.

Credit does not have to flash red to become a headwind. A steady rise in risk premiums raises the hurdle rate for projects, pressures valuations and makes another frictionless leg higher in technology more difficult.

The setup puts semiconductor-heavy Asian markets back in focus overnight as investors decide whether the latest AI financing wave still represents growth investment or an increasingly expensive bill coming due.

Intel Shows Equity Investors Still Want the AI Trade

There is also an important counterpoint.

Intel raised $20 billion through an upsized share offering, one-third more than originally planned, with the deal reportedly attracting more than $100 billion in demand. The offering priced at $95 per share, a 6.5% discount to Friday’s close.

That is a powerful reminder that capital markets remain very much open for companies tied to the AI buildout.

Alphabet is reportedly pursuing as much as $85 billion through various equity offerings, while Oracle’s financing plans include another $20 billion at-the-market program.

So the market is giving us two messages at once:

Equity investors still have an enormous appetite for AI exposure.

But:

Credit markets are beginning to charge more for the risk required to finance it.

That divergence is something worth watching closely.

Iran Headlines Keep Whipsawing Crude

Oil remains the other major macro variable.

Pakistan’s defense minister said signals over the last several days suggest the U.S. and Iran are “close to some sort of arrangement,” adding that developments are moving in favor of peace. Pakistan is currently acting as a mediator between the two sides.

The comments immediately hit crude.

Brent had traded as high as $90, but erased the move and fell back toward $88 as traders reacted to renewed optimism that an agreement could eventually restore traffic through the Strait of Hormuz.

That tells you just how headline-sensitive this market remains.

Before the war, Hormuz handled roughly one-fifth of global oil and gas flows, meaning any credible path toward reopening would remove a major geopolitical premium from crude.

But the situation is far from settled.

Shipping risks remain elevated, tensions have spread into the Red Sea, and refinery disruptions have appeared in Russia and Libya. Saudi Aramco has also delayed restarting its Jazan refinery following an attack claimed by Houthi militants.

So the oil market remains caught between two opposing forces:

Diplomatic progress → lower geopolitical premium

versus

Further disruption → renewed upside in crude and refined products

That matters well beyond energy because crude remains one of the biggest swing variables for inflation expectations and, by extension, the Fed.

Yen Back Toward 160, and Washington Is Watching Bonds

The Japanese yen is also back on the radar.

The currency weakened toward 160 per dollar after the effects of the recent coordinated U.S.-Japan intervention began to fade. The July intervention had briefly pushed the yen toward 155, but much of that move has already been retraced.

Treasury Secretary Scott Bessent has suggested Washington will do “whatever it takes” to support Japan, but the Treasury’s Exchange Stabilization Fund holds less than $220 billion, limiting how much intervention firepower it can deploy independently.

The bigger issue is why Washington cares.

It is not simply about the yen.

There is growing concern that renewed Japanese currency weakness and instability in the Japanese bond market could spill into U.S. Treasuries and push American long-term yields even higher. Bloomberg notes that benchmark 10-year yields recently reached their highest levels since Bessent took office.

That connects directly back to the broader fiscal story.

A weaker yen can increase pressure on Japan to intervene or liquidate dollar assets. Higher Treasury yields then make U.S. debt service more expensive. Higher debt-service costs reinforce fiscal concerns.

And the cycle feeds on itself.

The Bigger Picture

The market is effectively juggling three major macro pressure points at once:

1. Fiscal pressure and long-end yields.
The Treasury market is increasingly sensitive to the scale of U.S. borrowing and rising debt-service costs.

2. AI financing and credit.
Capital is still pouring into the AI ecosystem, but the cost of financing that buildout is becoming more important.

3. Oil and geopolitical risk.
Iran negotiations can take crude sharply lower on a single headline, while any renewed escalation can send it immediately back the other direction.

There is also an important dollar implication.

Normally, higher U.S. yields support the dollar. But if yields rise because investors are demanding compensation for deteriorating fiscal credibility rather than stronger economic fundamentals, the relationship can eventually invert.

In that scenario:

Higher yields become a symptom of U.S. risk rather than an advertisement for U.S. assets.

That is a much different macro regime.

Morning Wire Bottom Line

Risk assets continue to hold together, and demand for AI-related equities remains extraordinarily strong, but the cost of capital is becoming harder to ignore.

Long-end Treasury yields remain the pressure point. Credit spreads are beginning to matter more for the AI trade. Iran keeps crude headline-driven. And the renewed slide in the yen adds another potential source of stress for global bond markets.

The question for traders is no longer simply whether earnings can keep equities moving higher.

GRAIN DESK: Cash Markets, Crop Conditions & Weather Into the Finish

The grain trade heads toward Wednesday’s August WASDE with cash markets relatively firm in pockets, crop conditions holding together nationally, and weather still leaning favorable for much of the Midwest. The key question now is whether August moisture can finish the crop strongly enough to preserve the high yield potential already built into USDA expectations.

U.S. Cash: Old-Crop Soybeans Still the Standout

U.S. corn basis was mostly steady Monday, with a few firming pockets. Decatur, IL improved to +16U, Winchester, IN September basis firmed 5 cents to +20U, Hammond gained 6 cents to +15U, while Blair, NE strengthened to +1U for September. Most other interior locations were unchanged. River values were generally stable, although October Ohio River corn weakened 3 cents to -40Z.

Soybeans continue to tell the more interesting cash story. Sioux City strengthened another 5 cents to +65X, Manning improved 10 cents to +5X, and Incobrasa jumped 15 cents to +50X. That continues to show a localized scramble for remaining old-crop beans even with harvest beginning to creep closer.

Soy-product basis was largely steady. Spot meal remained firm nearby, September values gained roughly $10 in parts of the interior, while deferred OND meal remained softer. Cash crush margins continue to sit near a strong $3.25/bu, giving crushers plenty of incentive to keep looking for beans.

USDA also flashed 105,000 MT of corn to unknown destinations for 2025/26, while South Korea bought 60,000 MT of corn for late-September/early-October shipment.

South America: Quiet Cash, Harvest Weather Improving in Brazil

South American physical trade was extremely quiet Monday with no reported trades across Brazilian or Argentine soybeans, meal, oil or corn.

Brazil soybean September basis was steady, October slipped 3 cents, and November firmed 3 cents. Brazilian meal improved modestly, with September up $3 and October up $1, while soyoil weakened sharply, down 70-100 points.

Argentina meal was also slightly firmer, while Argentine soyoil dropped roughly 100-120 points across nearby positions. Brazilian late-September corn remained offered around +132 with no bid.

Weather is becoming more favorable for the Brazilian safrinha harvest. Rain has been reduced across southern Mato Grosso, Paraguay and much of Paraná, which should allow harvest to accelerate. Southern Brazil remains the exception, where heavier rain could continue delaying fieldwork and even create localized flooding concerns for wheat.

Argentina remains in relatively good shape. Soil moisture is favorable for winter crops across much of the country, with only western and northwestern areas needing additional rain. Fieldwork should generally advance around intermittent showers during the next two weeks.

China: Crush Remains Strong, But Inventories Are Heavy

China continues to process beans at a strong pace.

Last week’s soybean crush came in at 2.333 MMT, just below expectations but above both the prior week and last year. Total 2025/26 crush is now running 8.93% ahead of last season. Another roughly 2.325 MMT is expected this week.

That is the supportive side.

The less bullish side is inventory.

Soymeal stocks at crushers climbed to 1.09 MMT, up 8.66% week over week and 8.65% year over year. Soyoil stocks were roughly unchanged on the week but remain almost 21% above last year.

Livestock economics also remain challenging. Chinese hog margins improved to roughly -$12.94/head from -$16.46 last week, but remain dramatically weaker than the positive $24.16 seen a year ago.

So China continues to crush aggressively, but large product inventories and weak livestock margins keep the demand story from becoming outright bullish.

Crop Progress: The Crop Is Holding Together

Monday afternoon’s Crop Progress report was relatively uneventful nationally but contained some important regional differences.

Corn held at 61% good-to-excellent, right on expectations but below the five-year average of 63.4%.

Soybeans slipped to 62% good-to-excellent, one point below expectations but essentially in line with the five-year average.

Spring wheat improved to 51% good-to-excellent, above its five-year average of 49%, although below the 54% trade expectation.

The national corn crop is also moving quickly through its final reproductive stages. Roughly 61% was doughing and 16% dented, keeping development near historical norms as August weather becomes increasingly important for kernel weight.

The bigger story is regional rather than national.

Eastern Corn Belt: Improving

Recent rainfall has been particularly helpful across Ohio, Indiana, Iowa and Minnesota.

Ohio entered last week needing moisture, but widespread weekend rain improved corn prospects and should be even more beneficial for soybean pod fill.

Indiana received roughly 0.75-1.0 inch Sunday night, enough to stabilize crops with additional rainfall forecast. Early scouting is showing good kernel fill and little meaningful tip-back.

Illinois received less rain last week, but earlier moisture remains supportive. Early crop tours suggest an average to slightly above-average crop, rather than something exceptional.

Iowa & Minnesota: Generally Strong

Much of Iowa received an inch or more last week. Western and especially northwestern Iowa remain the problem areas, but the state overall still appears capable of trendline to slightly above-trend yields.

Minnesota may be the standout. Conditions have improved over the past several weeks and central Minnesota fields are being described as exceptionally strong. A record crop remains possible, with drought concerns largely isolated to the far southwest.

Dakotas & Nebraska: Where Yield Is Being Lost

This is where the bullish weather argument still has some credibility.

The Dakotas largely missed the recent beneficial rains. Hot, windy conditions continued to increase stress, particularly across southeastern South Dakota and much of North Dakota.

The outlook has deteriorated enough that trendline yields are no longer expected across the Dakotas.

Nebraska remains extremely variable.

Irrigated crops generally look fine, but dryland acres have suffered. Early scouting is finding plenty of 14- and 16-row ears but fewer 18- and 20-row ears, suggesting ear size may be restrained even where obvious tip-back remains limited.

That distinction matters because national ratings can obscure significant yield damage in individual western areas.

Weather: Still Mostly Bearish, Especially for Beans

From a market standpoint, the Midwest forecast continues to lean bearish.

Daily rounds of showers and thunderstorms are expected through much of the next two weeks, while widespread extreme heat remains absent.

World Weather expects much of the Midwest to receive meaningful precipitation this week. Roughly 75% of the region is expected to see rainfall Wednesday and Thursday, followed by another widespread round Friday through Sunday. Temperatures cool considerably later in the week after some mid-90s and localized triple-digit readings early on.

That is nearly ideal timing for soybeans.

August is the critical pod-fill period, and adequate moisture now directly supports seed size and final yield. Early field reports are already showing favorable pod counts, while improved moisture across Indiana, Ohio and Iowa should help crops finish.

Corn is somewhat different.

A large portion of yield potential has already been determined through pollination and ear formation, but moisture during grain fill still affects final kernel depth and test weight. The current forecast therefore helps protect existing corn yield potential more than dramatically increase it.

That is why Wednesday’s WASDE matters so much.

The market is looking for USDA near 182.4 bpa corn and 52.9 bpa soybeans. Recent weather does not provide much justification for sharply lowering national yields outside the western drought areas.

One Region Going the Other Way: Delta/Southeast

The Delta and Mississippi remain notably drier.

Rainfall over the next two weeks is expected to be limited, while warm-to-hot temperatures and declining soil moisture could continue reducing dryland yields.

That matters more for soybeans as we move deeper into August, particularly as southern crops finish pod fill and early harvest begins.

Grain Desk Bottom Line

The crop is approaching the finish line in better shape than the national condition number alone might suggest.

The eastern and central Corn Belt have received enough rain to stabilize or improve yield potential. Iowa remains mostly solid, Minnesota potentially exceptional, and August moisture is arriving at an almost perfect time for soybean pod fill.

The primary trouble spots remain the Dakotas, northwestern Iowa and dryland Nebraska, where some yield potential has already been lost and late rain can stabilize crops but cannot completely reverse earlier damage.

For corn, the weather is increasingly about preserving kernel weight.

For soybeans, August weather can still make or break final yield, and right now the pattern is mostly favorable.

That leaves the fundamental setup heading into Wednesday fairly straightforward:

Good finishing weather + strong early crop scouting + large USDA yield expectations = limited room for a bullish weather story unless USDA finds substantially more damage in the western Corn Belt than the market currently expects.

And that is what makes Wednesday’s August WASDE the next major test.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Mon, 10 Aug 2026 11:24:30 GMT

MACRO DESK: Bad News Is Good News But CPI Now Holds the Keys

Markets enter the new week back near record highs after Friday’s weak employment report revived the familiar “bad news is good news” trade.

July nonfarm payrolls declined by 23,000 while unemployment held at 4.1%, reinforcing signs that the labor market is losing momentum. Rather than spark recession fears, stocks initially embraced the weakness as investors increased expectations that the Fed will have more flexibility to ease policy.

But beneath the index rally, the tape remains considerably more complicated.

The latest Goldman Prime positioning data shows hedge funds continuing to reduce overall risk. U.S. long/short gross leverage fell 3.9% to 204.2%, placing it near the bottom of its one-year range. Net leverage, however, actually increased modestly to 53.6%.

In other words, funds are running smaller overall books without necessarily abandoning their directional long exposure.

That helps explain some of the violent rotation underneath the surface. Software and internet stocks squeezed sharply higher late last week while several popular semiconductor longs struggled. Single-stock gross trading activity also posted its biggest increase in seven weeks, another sign that rotation, covering and position management remain major drivers of the market.

Sector positioning is also worth watching.

Financials were among the most heavily purchased sectors for a fourth consecutive week, particularly payment processors, exchanges and capital markets names.

Energy may present the opposite setup. Hedge funds finally became modest sellers after seven straight weeks of buying, with short sales running roughly four times long purchases. That comes with energy exposure already sitting near historical extremes, leaving the sector vulnerable if crude oil loses momentum.

The bigger question this week, however, moves back to inflation.

Wednesday brings July CPI, followed by PPI Thursday and retail sales Friday.

That creates an important test for the market’s new Fed narrative.

A softer CPI print would validate the bullish interpretation of Friday’s employment report: cooling labor plus cooling inflation gives the Fed considerably more room to ease.

A hotter CPI print creates a much more difficult combination. Weakening employment alongside persistent inflation would limit the Fed’s flexibility and could quickly challenge the equity market’s “bad news is good news” reaction.

Treasury supply adds another wrinkle, with $58 billion of 3-year notes, $42 billion of 10-year notes and $25 billion of 30-year bonds coming to market this week.

Bottom line: Friday shifted attention away from earnings and squarely back toward the Fed. The labor market has given the doves ammunition. Now CPI has to confirm it. With hedge funds running lower gross exposure, crowded sector positioning and rotation still elevated underneath the indexes, Wednesday’s inflation report has the potential to determine whether the breakout continues or the market gets another volatility event.

MACRO DESK: Iran Hardens Hormuz Demands as Washington Backs Away From Escalation

The geopolitical backdrop remains a key macro risk heading into the new trading week, with Iran complicating hopes for a near-term reopening of the Strait of Hormuz.

U.S. officials had recently signaled that an interim agreement to restore commercial traffic could be close. That optimism has faded after Tehran raised the price of any deal, demanding sanctions relief, access to frozen assets, war reparations, an end to the U.S. naval blockade and a reduced American military presence in the region.

Iran’s position is straightforward: the Strait will not fully reopen unless Washington makes significant concessions.

That matters because Iran has shown that even intermittent missile and drone threats can disrupt traffic through one of the world’s most important energy corridors. Roughly one-fifth of global oil shipments normally move through Hormuz, giving Tehran significant leverage over crude prices and the broader inflation outlook.

At the same time, Washington appears reluctant to return to a broader military campaign.

President Trump said over the weekend that the administration is “low-keying it” with Iran, signaling a preference for economic pressure and negotiations rather than an immediate return to major strikes.

The result is an uncomfortable stalemate.

The U.S. wants Hormuz reopened without making major concessions. Iran believes control over shipping gives it leverage to demand those concessions. Neither side appears ready to blink.

For markets, that means the geopolitical risk premium is unlikely to disappear quickly.

The timing is particularly important with U.S. inflation data due this week.

Friday’s weak employment report revived expectations that softer economic conditions could give the Federal Reserve greater flexibility. But renewed pressure on crude oil and gasoline would complicate that narrative.

The transmission mechanism is simple:

Hormuz disruption → higher crude → higher energy costs → firmer inflation expectations → less flexibility for the Fed.

Markets are now balancing two competing forces: a cooling labor market pushing toward easier policy, while the unresolved Iran conflict threatens another energy-driven inflation shock.

That makes Wednesday’s CPI report even more important. A soft inflation print alongside stable or falling crude would reinforce the dovish interpretation of last week’s jobs data.

But hotter inflation combined with renewed strength in oil would create a tougher setup: weakening growth alongside persistent price pressure.

Bottom line: Washington is trying to lower the temperature with Iran, but Tehran is using Hormuz as leverage for major concessions. Until a credible agreement emerges, the Strait remains a live risk capable of quickly moving crude, inflation expectations, Treasury yields and Fed pricing.

For traders, the question is no longer simply whether the Fed can respond to a softer labor market. It is whether energy markets allow it to.

GRAIN DESK: August WASDE Has a History of Moving Markets

Wednesday’s August WASDE is one of the more important USDA reports of the summer, and history shows why traders should be prepared for volatility.

Looking back at the last ten August WASDE sessions, corn has averaged an absolute move of 2.53%, wheat 2.48%, and soybeans 1.68% on report day. Corn’s average intraday range has been roughly 19 cents, beans 36 cents, and wheat nearly 23 cents.

Two reports stand out as reminders of just how quickly USDA can change the balance sheet narrative.

2019 was the bearish shock. Despite widespread planting delays and expectations for sharply reduced acreage, USDA pegged corn planted area at 90.0 million acres and yield at 169.5 bushels per acre, both well above expectations. Production came in near 13.9 billion bushels while 2019/20 ending stocks jumped to 2.181 billion. USDA also reduced ethanol and export demand. Corn immediately traded its 25-cent daily limit lower, finishing down nearly 6%, while wheat fell 5.65% as the larger supply outlook pressured the entire grain complex.

2021 was almost the exact opposite. Drought across the northern Plains pulled corn and soybean yields below expectations, with USDA cutting 2021/22 corn ending stocks by 190 million bushels to 1.242 billion. Global corn production was also reduced. Wheat delivered an even bigger surprise after USDA slashed Russia’s crop estimate and sharply reduced Canadian production, tightening global supplies. Wheat rallied more than 4%, while corn gained 2.2%.

Those two years illustrate what makes August different.

By August, USDA begins transitioning from assumptions about crop potential toward a much clearer picture of what is actually growing in the field. Yield changes become increasingly important, and even relatively small adjustments can produce large changes in production and ending stocks.

That makes Wednesday’s report less about whether USDA is simply “bullish” or “bearish” and more about where USDA deviates from what the market has already priced.

For corn, the biggest focus will be the yield and production number and how much USDA is willing to adjust after the growing season so far.

For soybeans, yield matters, but traders will also be watching whether USDA makes meaningful changes to crush, exports and ultimately the carryout.

Wheat remains heavily tied to the international balance sheet, making changes to Russia, Canada and other major exporters potentially just as important as the U.S. numbers.

What History Says

The last decade also shows that August WASDE reactions can be violent in either direction:

Corn: average absolute move 2.53%, including -5.98% in 2019 and +2.21% in 2021
Soybeans: average absolute move 1.68%, with the largest move in the sample -4.68% in 2018
Wheat: average absolute move 2.48%, including -5.65% in 2019 and +4.07% in 2021

Bottom line: August WASDE has historically been capable of resetting the market’s entire supply narrative. The biggest moves have occurred when USDA challenged a strongly held assumption, whether that was finding substantially more corn supply in 2019 or sharply tightening global grain availability in 2021.

Heading into Wednesday, the key isn’t simply whether USDA cuts or raises production. It is whether the adjustment is larger than what traders have already priced in. That difference between expectation and reality is where the volatility comes from.

GRAIN DESK: Friday Cash Update + COT Breakdown

U.S. Cash

U.S. cash markets finished Friday relatively steady, but the old-crop soybean situation remains the standout.

Corn basis was mostly unchanged across the interior, with only a few isolated adjustments. Cedar Rapids and Clinton held at -10U, Winchester remained +35U, Portland +38U, and Marion, OH held +35U. River values were mixed, with the Ohio River at -12U, Illinois River at -10U, and Mid-Miss at -32U.

Soybean basis continues to show the scramble for nearby physical supply, especially in the western Corn Belt. Sioux City was posted at +60X, Council Bluffs +30X, Decatur, IL +40X, Cairo +35X, and Incobrasa +35X. The report specifically notes that processors continue to search for old-crop beans, even as the September/November spread finished around a 17-cent carry and deliverable stocks remain larger than recent years.

Soy-product markets were quiet. Spot meal was steady nearby, while deferred meal values weakened by roughly $10-$30 depending on location. Cash crush margins remain strong near $3.25/bu. Soyoil basis was steady at the Gulf and interior, but Q4 offers remain limited amid California regulatory uncertainty.

South America Cash

South American cash trade was very quiet Friday, with no reported soybean, meal, soyoil or corn trades in the StoneX sheet.

In Brazil, soybean September basis slipped 4 cents, while October and November were steady. The Brazilian real strengthened 0.56% to 5.0805, which can make farmer selling less attractive in local currency terms.

Brazilian soymeal was softer, with September down $3 and October down $1. Brazilian soyoil fell 50 points in September and October.

Argentina was similarly quiet. Soybean basis was steady for September, meal was mostly unchanged, while August soyoil gained 20 points before deferred values softened. Brazilian corn had no reported trades, with late-September showing no bid against a +132 offer.

Argentina farmer selling showed stronger corn movement on August 6, while soybean movement declined from the prior session. Corn farmer sales totaled 366,247 MT, up more than 75% from the previous reported day, while soybean selling dropped about 14.5% to 153,390 MT.

China

China’s domestic soybean-product markets firmed modestly last week.

Domestic soyoil increased 40-60 yuan to roughly 8,540-8,690 yuan/tonne, although prices remain 3.8%-4.5% below the March highs.

Soymeal increased 10-50 yuan to 2,990-3,070 yuan, but remains roughly 9.6%-11.4% below March highs.

Chinese corn was mixed geographically:

Shandong: $336.41/tonne, down $4.11 on the week
Guangdong: $363.08, up $0.36
Henan: $333.44, up $0.33
Jilin: $326.03, down $2.64

Compared with a year ago, Guangdong remains notably stronger, up $20.24/tonne, while Shandong is down $0.86 and Henan down $3.83.

So China is not giving us a clear bullish demand signal in corn, but domestic soy-product values did stabilize heading into the weekend.

COT: Funds Are Long, But They Took a Big Chunk of Soy Risk Off

The most interesting COT development was the size of the managed-money corn position.

Corn

Managed money was 181,946 contracts net long, increasing its position by roughly 13,500 contracts on the week.

That was reportedly 61,500 contracts longer than the market had expected.

Commercials remained heavily short at roughly 493,000 contracts, while estimated managed-money positioning at the end of the week had grown toward 164,000 long.

Takeaway: Funds already have meaningful corn length heading into WASDE. That makes a bearish yield or acreage surprise potentially more dangerous because there is plenty of speculative length available to liquidate.

Soybeans

Managed money remained 125,466 contracts net long, but cut that position by nearly 29,500 contracts during the week.

More broadly, the managed-money soy complex shed approximately 69,900 contracts of net length, falling to 283,600 contracts long.

That consisted of:

Soybeans: -29,500
Soyoil: -29,200
Soymeal: -11,200

Despite the liquidation, positioning is drastically different from this time last year, when the soy complex was roughly 100,200 contracts short.

Soyoil managed money remains long about 80,700 contracts, while soymeal funds remain long roughly 77,500.

Takeaway: Funds are still bullish the soy complex, but they clearly started taking chips off the table ahead of USDA.

Wheat

Wheat positioning turned noticeably less bullish.

The aggregate managed-money wheat long fell about 16,000 contracts to only 18,200 net long, versus a massive 160,500-contract short at the same point last year.

Chicago wheat funds swung back to a 23,786-contract short, selling roughly 16,900 contracts during the week. KC wheat remained about 33,100 contracts long, while Minneapolis wheat held approximately 8,900 contracts long.

There are also two notable commercial/swap extremes:

KC wheat commercial shorts are the largest since February 2021, while Minneapolis wheat swap length is the largest on record.

Positioning Bottom Line Ahead of WASDE

The setup heading into Wednesday is important:

Corn: Funds are heavily long and even longer than expected.
Beans: Still significantly long, but funds aggressively reduced exposure last week.
Soyoil: Still crowded long despite sizable liquidation.
Wheat: Much less bullish, with Chicago funds back short.

That creates an asymmetric WASDE setup.

If USDA comes in bearish corn, especially with a yield above expectations, the large managed-money long could accelerate liquidation.

If USDA delivers a genuine bullish surprise, particularly on yield, corn has enough speculative conviction already in place that funds could quickly add back risk.

Bottom line: Cash markets remain strongest in old-crop soybeans, South America is quiet, China is offering only mixed demand signals, and speculative positioning leaves corn as the market with the most obvious liquidation risk heading into Wednesday’s USDA report.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Fri, 07 Aug 2026 10:58:58 GMT

Macro Desk

The market heads into Friday’s payroll report with one question front and center: is the labor market merely cooling, or starting to crack?

Consensus is looking for 80K jobs added in July, up from June’s 57K, with unemployment holding at 4.2% and wages rising 0.3% M/M / 3.5% Y/Y. But there is a very wide range of estimates, and several indicators point to downside risk.

Goldman is slightly below consensus at 75K, while Vanguard is way down at just 18K. ADP also disappointed, showing only 44K private jobs versus 70K expected, suggesting the private payroll side of Friday’s report may be vulnerable.

That said, the data are far from uniformly weak. Initial claims during the payroll survey week fell to 188K, the lowest since 1969, signaling layoffs remain extremely limited. Manufacturing employment also improved sharply, with the ISM employment index jumping to 52.8, its first expansion reading in 33 months. Services went the opposite direction, falling back into contraction at 47.4.

One wildcard is revisions. Barclays notes June’s payroll estimate was based on barely half the normal survey responses, meaning Friday could bring unusually large revisions to prior months. Direction is difficult to handicap, but the revision story may matter almost as much as the headline July number.

The Fed Angle

Fed officials continue to describe employment as broadly stable, while keeping inflation as the bigger problem. That makes Friday somewhat unusual: a stronger jobs report may actually be the more bearish outcome for stocks.

The market is essentially trading a “good news is bad news” setup.

A hot payroll number, particularly with unemployment staying at 4.2% or falling, would reinforce higher-for-longer policy expectations, push Treasury yields higher and pressure duration-sensitive growth stocks.

A moderate miss, on the other hand, could actually be the market’s preferred outcome: enough cooling to pull yields lower without creating fears that the economy is rolling over.

The Payroll Sweet Spot

JPMorgan’s scenario framework makes the setup pretty clear:

Above 150K: bearish. SPX roughly -0.50% to -1.75%
100K–150K: roughly flat to mildly bearish
60K–100K: the consensus zone, roughly -0.25% to +0.50%
20K–60K: potentially the best Goldilocks outcome, with SPX +0.25% to +0.75%
Below 20K: danger zone. Rates may fall, but recession concerns could overwhelm the dovish impulse.

So the market probably doesn’t want a blowout jobs number, but it also doesn’t want an outright collapse.

Something around 30K–70K with unemployment at 4.2%-4.3% may be the cleanest bullish outcome: cooling labor, lower yields, but no immediate recession signal.

Options are only pricing about a 0.7% move for Friday, so there is also room for realized volatility to exceed expectations if payrolls, unemployment or revisions deliver a genuine surprise.

Bottom line: Friday is less about whether 80K is “good” or “bad” and more about what the report does to Treasury yields and Fed expectations. Hot = yields up and equities vulnerable. Moderately soft = likely the bullish sweet spot. Extremely weak = initially dovish, but potentially flips quickly into growth/recession fear.

Grain Desk

The grain trade is heading into next week’s USDA report with a pretty clear divide: weather remains mostly favorable, supply expectations are still comfortable, but demand headlines, especially China, are keeping soybeans supported.

Soybeans

Soybeans held their 50-day moving average Thursday, despite disappointing weekly export sales. Old-crop sales came in at just 1.2 million bushels, while new-crop sales were 33.2 million bushels. The bigger story is that total new-crop commitments have reached 308 million bushels versus 132 million a year ago, even though China had largely been absent from the book.

That absence is starting to change.

USDA flashed another 122,000 metric tonnes of 2026/27 soybeans to China, giving managed money another reason to front-run the possibility of additional Chinese buying ahead of the expected Trump-Xi meeting in September.

The export comparison is getting interesting too. October-delivered PNW beans into China are around $14.45/bu. Brazil is only about 8 cents more expensive, while Argentina is roughly 58 cents cheaper. The desk estimates the PNW may already be around 65% covered for October, and falling basis values may have trouble attracting additional farmer selling.

The problem for soybean bulls remains the crop.

Recent Midwest rains have likely taken some of the extreme low-yield scenarios off the table. Private yield ideas for next week’s USDA report are running around 52-55 bpa, and the desk believes this week’s rainfall probably eliminates ideas below 52. That leaves soybeans more likely trading in roughly an $11.00-$12.50 range unless demand materially accelerates.

Corn

Corn remains the market where large supply versus strong demand is creating a grinding, sideways setup.

Weekly export sales were only 116,700 tonnes, but cumulative shipments remain extremely strong. Corn shipments to date are approximately 87.1 million tonnes versus 70.6 million last year, up more than 23% year over year.

The bigger risk comes next week.

Private corn yield estimates ahead of USDA are running roughly 179-189 bpa. The desk is also considering scenarios where USDA either leaves planted acres at 95.3 million or adds another 1 million acres. Even under those scenarios, stocks-to-use remains around 11-12%, which argues against a complete collapse in price but also makes it difficult to sustain rallies without a new demand story.

Their working range is roughly $4.20-$4.80 corn, with seasonal lows potentially developing around $4.40-$4.50 over the next one to two weeks.

But positioning makes next week important.

Managed money is estimated to be roughly 118K contracts long corn, compared with being 176K short at roughly this point last year. If USDA delivers an acreage increase plus a yield close to the upper end of trade expectations, those longs become a liquidation risk.

South America could add another bearish layer. Private Brazilian corn estimates are running 2-5 MMT above USDA’s 138 MMT, while Argentina estimates are as much as 4 MMT above USDA’s 63 MMT.

Bottom line on corn: strong demand is preventing a major washout, but favorable weather, potentially larger U.S. production and unusually long fund positioning argue for sideways-to-lower trade into USDA.

Wheat

Wheat has backed off again, with Kansas City September trading below $7.00 for the first time since mid-July. The 50-day moving average sits around $6.73, while calendar spreads have widened back into carry, another sign that nearby supplies are comfortable.

There was some demand. South Korea bought 36,800 tonnes of U.S. wheat, while Algeria purchased roughly 540-720K tonnes, although Romania and Bulgaria are expected to supply most of that business.

Still, the U.S. export program remains weak. Total wheat commitments are around 265 million bushels, down 30% from last year and the second-lowest level in 17 years.

Cash & South America

U.S. interior basis was mostly steady, although river corn weakened. Ohio River corn slipped 1 cent, Illinois River dropped 10 cents, and Mid-Mississippi fell 8 cents in the nearby. Some eastern interior locations remain relatively firm, including Winchester at +35U, Portland at +38U and Greenville at +33U.

South American soy values remain competitive. Brazil reportedly traded October beans around +155X, while Brazilian meal weakened and soyoil premiums softened. Argentina soybean trade was quiet.

Ocean freight into China also moved higher across every major origin. China freight from the U.S. Gulf rose 5.26% to $70/tonne, PNW increased to $35.50, Brazil to $51.25, and Argentina to $60.75. That continues to leave the PNW with a significant freight advantage into China.

Weather

Weather remains the biggest headwind for the bulls.

The Midwest is expected to see repeated rounds of showers and thunderstorms over the next two weeks without significant heat, keeping crop conditions favorable and yield potential high across much of the Corn Belt.

The exceptions remain the northwestern Belt, especially portions of South Dakota, Nebraska, northwest Iowa, eastern North Dakota and northwest Minnesota, where soil moisture remains marginal. Additional rain Sunday-Monday and again around August 15-20 should help stabilize those areas.

The Delta and portions of the Southeast are the bigger concern. Limited rainfall combined with heat and declining soil moisture could produce permanent yield losses in dryland crops if the pattern persists.

Grain Desk Bottom Line: the market is still being asked to absorb a potentially very large U.S. crop. Corn looks vulnerable into USDA because funds are unusually long, soybeans have a better demand story with China returning, and wheat continues to struggle against weak U.S. export demand. For now, favorable August weather keeps the fundamental advantage with the bears, while China remains the biggest potential headline catalyst capable of disrupting that setup.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Thu, 06 Aug 2026 12:37:22 GMT

Macro Desk

U.S. futures are mixed Thursday morning as the market takes a breather ahead of Friday’s payroll report. S&P futures are hovering slightly positive, while Nasdaq futures are under pressure as another round of earnings disappointments hits the technology complex.

The theme this morning is becoming familiar: AI Math On, AI Math Off.

Sandisk and Western Digital are sharply lower after both companies delivered softer forward revenue outlooks, reviving concerns that expectations across the memory and storage trade have simply moved too far, too fast. Software is getting hit as well, with AppLovin, Datadog, HubSpot and Figma all under pressure following earnings or guidance that failed to clear increasingly high expectations.

That weakness spilled into Asia overnight. South Korea’s KOSPI fell more than 4%, led by SK Hynix and Samsung, while Japan, Hong Kong and China were also weaker.

The broader takeaway is not necessarily that the AI trade is broken. It is that the market is becoming much less forgiving.

After last month’s tech selloff and subsequent rebound, investors are once again asking the same question: How much growth and AI monetization is already priced into these stocks?

That matters because positioning remains crowded. TMT hedge funds reportedly lost roughly 10% in July as the AI selloff forced deleveraging, and every disappointing earnings report now risks triggering another round of position reduction.

Hormuz Remains the Other Major Macro Driver

Oil remains choppy around $80 Brent as markets wait for confirmation of an Iran-Oman framework that could partially reopen shipping through the Strait of Hormuz.

Reports suggest Iran and Oman have agreed on the broad structure of a temporary shipping arrangement that could last roughly 60 days, but the proposal still requires approval from Iran’s National Security Council.

Markets are increasingly pricing in some form of reopening, which has helped remove part of the geopolitical risk premium from crude and ease fears of another energy-driven inflation shock.

But this is not a done deal.

Iran has characterized the proposal as temporary, and several political and security questions remain unresolved. With markets having already priced in a meaningful amount of good news, another breakdown in negotiations could quickly put the geopolitical premium back into oil.

Rates: Fed Still Has an Inflation Problem

Treasury yields are slightly higher this morning, with the 10-year around the mid-4.60% area.

Recent Fed commentary continues to lean hawkish.

Mary Daly supported holding rates steady in July but acknowledged that persistent inflation could eventually require a stronger response. Lisa Cook similarly said she is prepared to raise rates if the disinflation trend fails to re-emerge.

The economic data continues to make the Fed’s job difficult.

ADP employment growth came in softer than expected at 44,000, while the ISM Services employment index dropped below 50. But the rest of the ISM report was considerably stronger. New orders climbed and prices paid jumped to 70.3, reinforcing the idea that economic activity remains resilient while inflation pressure refuses to disappear.

That combination keeps the Fed boxed in.

Friday Payrolls Are the Main Event

Today brings jobless claims, productivity and unit labor costs, but Friday’s nonfarm payroll report is the real event risk.

The setup is increasingly binary:

Weak payrolls: strengthens the argument that the labor market is finally cooling and reduces pressure on the Fed to tighten further.

Strong payrolls: suggests recent employment weakness was temporary and could pull expectations for the next Fed hike forward.

For today, that likely leaves the market caught between profit-taking in crowded technology trades, improving expectations around Hormuz, and reluctance to make a major macro bet ahead of payrolls.

Bottom Line

The broad market is holding together, but underneath the surface there is another meaningful rotation out of expensive AI and technology names.

The AI investment cycle remains intact, but earnings are showing that “good” is no longer good enough when valuations and expectations are this elevated.

At the macro level, Hormuz remains the biggest inflation wildcard while resilient U.S. activity continues to complicate the Fed outlook.

For today, expect positioning and individual earnings reactions to dominate.

Friday payrolls are where the next real macro move likely begins.

Grain Desk

Grain markets head into Thursday with the same basic tug-of-war we have been watching: solid demand underneath the market, but U.S. weather continues to make it difficult to build much of a production-risk premium.

Cash Markets: Mostly Steady, Eastern Corn Still Has a Pulse

U.S. cash corn was mostly unchanged Wednesday, although a few eastern locations continued to firm. Dayton improved 10 cents in the nearby and 8 cents for September, Greenville gained 9 and 5 cents respectively, while Blair, Nebraska also firmed modestly. River values were generally steady, with Ohio River at -8U, Illinois River -5U and the Mid-Mississippi -24U.

Soybean basis was more mixed. Decatur strengthened 3 cents to +40 nearby, while several locations weakened, including Cairo down 15 and the Illinois River down 4. That continues to look like a market where processors are willing to pay for nearby ownership, but there is considerably less urgency as we move toward new crop.

At the Gulf, August CIF beans slipped 4 cents to +100X and August corn fell 3 cents to +96U. September beans, however, firmed a penny to +101X while September corn held +110U.

China Is Still Showing Up

The demand story remains important, especially in soybeans.

USDA has now flashed 642,000 metric tons of new-crop soybeans, including 264,000 tons directly to China and another 378,000 tons to unknown destinations.

That matters because the market has spent much of the summer questioning when Chinese buying would finally become visible. We are starting to see some evidence of that business appearing.

Ahead of Friday’s export sales report, trade expectations for 2026/27 soybeans are a hefty 900,000 to 1.55 million metric tons, after last week’s 1.33 million. New-crop corn sales are expected between 700,000 and 1.2 million tons.

So while weather remains bearish, demand is quietly becoming a better part of the story.

South America

Brazilian soybean cash trade remained active with October reported around +155/+156X, up roughly 3 cents on the day. September was steady while November was unchanged. Argentina reported little soybean business.

That keeps Brazil competitive, but the return of Chinese interest in U.S. beans is important as we approach the U.S. export window.

Weather: Still Difficult for the Bulls

The Midwest forecast remains broadly favorable.

Daily rounds of showers continue through the next week with no significant heat threat, and existing soil moisture should allow crop development to remain favorable through the middle of August.

There are exceptions.

Eastern South Dakota, nearby Nebraska into northwest Iowa, and eastern North Dakota into northwest Minnesota remain areas to watch. Those regions still need more meaningful soaking rain, although additional showers Sunday into Monday and again August 14-19 could stabilize yield potential.

The bigger global weather problem remains Europe, where more than 50% of the corn crop continues to experience stress, while Black Sea heat is expected to ease after Sunday.

For now, there simply is not enough widespread U.S. weather stress to force the market to materially reduce yield expectations.

StoneX’s first survey-based estimates put national corn yield at 184.8 bpa, above USDA’s current 183.0 trend estimate, while soybeans came in exactly in line with USDA at 53.0 bpa. That is going to keep the market focused on the possibility of another very large corn crop.

Corn Demand: Ethanol Softens

Weekly ethanol production dropped 26,000 barrels per day to 1.107 million, although that remains 2.4% above the same week last year.

The bigger issue is pace. The report calculates production would need to average roughly 1.182 million barrels per day to reach USDA’s current 5.55-billion-bushel corn-for-ethanol forecast, leaving current production below the required pace.

Ethanol stocks fell 202,000 barrels to 24.524 million, while gasoline demand was essentially unchanged at 9.031 million barrels per day.

Fund Positioning

Estimated managed-money positioning still shows funds long roughly 113,400 corn, 120,000 soybeans, 76,200 meal and 92,400 soybean oil contracts, while remaining short roughly 11,900 wheat.

Interestingly, those estimated longs have been shrinking: corn was down about 7,000 contracts Wednesday, beans down 4,000 and soybean oil down 4,000.

Bottom Line

Corn: Weather remains the anchor. Yield expectations near 185 bpa make it difficult to sustain rallies without a meaningful forecast change. Demand is respectable, but ethanol pace is a small negative.

Soybeans: Probably the more interesting market right now. Weather is favorable, but Chinese purchases are finally becoming visible and new-crop export demand is building. That gives beans a better fundamental floor than corn.

Wheat: Still the commodity most capable of reacting to global weather and geopolitical headlines, with European crop stress and Black Sea conditions worth monitoring.

The story right now is pretty simple:

Weather says supply. China is starting to say demand.

And as we get deeper into August, that battle should determine whether these markets can finally establish a meaningful harvest low.

NASDAQ: SNEX

Walk-Squawk Morning Wire

Walk-Squawk — Tue, 04 Aug 2026 12:22:57 GMT

Macro Desk: AI Capex Gets Another Vote of Confidence, While the Yen Remains the Macro Wild Card

The AI capex debate is starting to shift again.

For months, the market has worried that hyperscalers were spending too aggressively on data centers, power infrastructure and AI capacity without enough evidence that those investments would generate acceptable returns.

Caterpillar’s quarter just gave the other side of that argument another piece of evidence.

CAT reported a huge Q2 beat, with revenue rising 24% year over year to $20.54 billion, the first $20 billion quarter in company history. Machinery, Power & Energy revenue jumped 25%, while operating income in the segment surged 51%.

The important part for the broader market is where that demand is coming from.

Management pointed to strong activity across power, energy and heavy equipment as data-center construction, reshoring and the broader U.S. reindustrialization cycle continue to drive demand.

CAT shares jumped roughly 8% premarket after getting crushed nearly 23% last month amid fears that the data-center spending boom was starting to cool.

That makes today’s reaction important.

The AI Capex Debate Is Changing

The market spent much of the summer asking:

“Are these companies spending too much?”

The conversation is increasingly becoming:

“What if they actually aren’t spending enough?”

Hyperscaler cloud backlogs have reportedly grown more than 150% year over year to roughly $1.7 trillion, considerably faster than the roughly 80% increase in capex.

Amazon, Microsoft, Alphabet and Meta continue to talk about demand exceeding available capacity, while Amazon’s Andy Jassy said the demand AWS is already seeing for 2028 is “striking.”

Morgan Stanley now sees hyperscaler capex approaching $1 trillion this year.

That spending doesn’t stay inside Silicon Valley.

It flows directly into:

Data centers
Power generation
Electrical equipment
Cooling infrastructure
Construction
Heavy machinery
Copper and other industrial commodities
Grid expansion

That is why CAT matters.

It’s another real-economy confirmation that the AI buildout is moving beyond Nvidia chips and into an enormous physical infrastructure cycle.

Potential Catch-Up Trade

There is another interesting wrinkle.

Investors remain heavily concentrated in semiconductors, while MegaCap Tech outside the semis remains relatively underowned.

Meanwhile, valuations have compressed.

Large-cap technology positioning is only modestly overweight despite improving earnings and upward revisions, and the S&P Information Technology sector recently traded around 20x forward earnings, near one-year valuation lows and below its longer-term average near 23x.

JPMorgan argues that MegaCap Tech ex-semis is now more than two standard deviations below its average forward valuation since 2018.

If investors become convinced the AI spending cycle is generating legitimate returns, the next phase of the trade may not necessarily be another vertical move in semiconductors.

It could instead be a rotation into the hyperscalers and infrastructure beneficiaries that have lagged.

MAGS has already bounced nearly 10% from its recent lows and reclaimed its 200-day moving average.

That is worth watching.

Meanwhile, Don’t Ignore the Yen

The largest macro risk sitting underneath this improving AI narrative remains Japan.

Japan and the United States have now confirmed coordinated intervention to strengthen the yen after USD/JPY approached 164.

Japan appears to have spent nearly $100 billion across two sessions, while the U.S. Treasury also participated, including intervention through EUR/JPY.

That is a major escalation.

The immediate concern isn’t simply USD/JPY.

It is the enormous global yen-funded carry trade.

For years, investors have borrowed cheaply in yen and deployed that capital into higher-yielding assets around the world.

A rapidly strengthening yen forces some of those positions to unwind.

That means what starts as an FX move can quickly spill into:

Treasuries → equities → credit → global risk assets.

Authorities appear determined to keep USD/JPY below roughly 158-160, with Goldman traders seeing 155 as the next major level and potentially 152-153 if the move accelerates.

The problem is intervention does not fix the underlying issue.

Japan still has extremely loose monetary conditions relative to the United States, massive government debt and a central bank reluctant to meaningfully tighten policy.

So intervention can squeeze yen shorts and disrupt positioning, but unless the BOJ ultimately validates the move with tighter policy, the carry trade could eventually rebuild.

What Matters Today

The market therefore has two competing forces.

Bullish:
The AI infrastructure story continues to validate itself. Caterpillar’s earnings reinforce the idea that hyperscaler spending is feeding a much broader industrial and power investment cycle.

Risk:
A disorderly yen rally could trigger another round of global deleveraging as crowded carry trades are forced out.

For equities, the ideal environment would be a controlled strengthening of the yen, rather than another violent intervention-driven move.

For AI, CAT is another important confirmation that the capex cycle is not just accounting entries at Microsoft, Amazon and Meta anymore.

It’s showing up in the physical economy.

That may ultimately be the more important message from this morning’s earnings.

Grain Desk: Crop Ratings Slip as Western Belt Stress Builds

The grain trade is starting the week with a little more weather risk creeping back into the conversation. National crop ratings came in below expectations, stress remains concentrated across the western Corn Belt, and the next 7–14 days are becoming increasingly important for corn grain fill and soybean pod development. Meanwhile, China continues to crush soybeans at a strong year-over-year pace and USDA flashed another sizable new-crop soybean sale to China.

U.S. Cash Market

Interior corn basis remains relatively firm despite harvest getting closer. August corn was quoted around +35U at Winchester, +33U Portland, +30U Cloverdale and +20U Dayton, while Iowa remains considerably softer with Cedar Rapids at -10U, Jewell at -22U, and Blair, Nebraska at -8U.

River values remain softer with the Ohio River around -3U, Illinois River -6U, and Mid-Mississippi around -24U.

Soybean basis is similarly mixed but remains strong around major crush locations. Decatur, Illinois was around +37Q, Cairo +50Q, Claypool +30Q, and Lafayette +30Q, while northern Iowa and Minnesota remain considerably weaker.

At the Gulf, August CIF corn was around +101U, September +113U, while August CIF soybeans were around +105X.

The U.S. crush remains strong. June soybean crush totaled 217.8 million bushels, putting September-June crush roughly 9% above last year. Corn used for ethanol totaled 466.7 million bushels in June, with crop-year usage running about 1% ahead of last year.

South America

Brazilian soybeans continue to trade, although nearby basis softened slightly. September Paranaguá beans were around +135U, with October around +138/+165X. February reportedly traded +25H and March -12H.

Brazilian soybean meal also reportedly traded September near +16U.

Argentina remains considerably quieter, with no reported soybean trades in the latest session and limited activity across meal and oil.

Brazilian corn was also quiet, with late-September offers around +132 but no corresponding bid.

South American weather is generally manageable. Southern Paraguay and far southern Brazil are expected to see frequent rain over the next two weeks, potentially slowing fieldwork, while most of central and northern Brazil stays relatively dry. Argentina gets rainfall through Thursday, particularly from La Pampa and Buenos Aires northeastward, before conditions trend drier later in the period.

China: Demand Is Still There

China’s soybean crush came in at 2.326 MMT, below expectations but above both the prior week and last year. Cumulative 2025/26 crush is now running nearly 9% above last year.

This week’s crush is expected around 2.359 MMT.

Importantly, USDA also flashed 624,150 tonnes of 2026/27 soybeans, including 488,000 tonnes to China and another 136,150 tonnes to unknown destinations.

Chinese soybean inventories remain large, however, and domestic livestock economics aren’t particularly exciting. Hog prices fell another 3.2% last week and producer margins remain negative at roughly -$17.50 per head.

The basic message remains: China is crushing plenty of beans, but Brazil remains the economically preferred origin into Q3/Q4 while U.S. crush margins into China remain less attractive.

Crop Progress & Conditions

Monday’s crop ratings provided the first slightly more meaningful warning sign.

Corn: 61% good/excellent, versus 63% expected.

Soybeans: 63% good/excellent, versus 64% expected.

Spring wheat: 55% good/excellent, better than the 52% expectation.

The bigger story isn’t necessarily the national number, but where the deterioration is occurring.

Western Iowa, southwestern Minnesota, southeastern South Dakota and portions of western Nebraska remain the primary trouble spots.

Eastern and central Iowa are generally in very good shape after recent rains. Ohio also received meaningful relief over the weekend, while Indiana and Illinois remain highly variable but generally stable.

The crop is getting later in development. Corn is nearing the end of pollination and moving deeper into grain fill, while essentially all soybeans are flowering and roughly half are podding.

That means the weather window is changing.

Weather: August Still Matters

The next 7–14 days remain yield-building weather, particularly for corn kernel weight and soybean pod retention.

Roughly 80% of the Midwest could receive up to 0.75 inch this week, with bands of 0.75–1.75 inches or more, particularly from southeastern Nebraska through northern Illinois and southern Wisconsin.

Temperatures remain mostly manageable for now, generally 70s and 80s, before warmer conditions return late this week and into the weekend.

The problem is that some of the driest areas may not receive enough soaking rainfall.

Northwest Iowa, southwest Minnesota, southeast South Dakota and parts of Nebraska remain the areas to watch.

Corn still has some ability to add yield through roughly mid-August, especially through kernel weight. After that, rainfall increasingly becomes about protecting existing yield rather than building additional yield.

Soybeans have a longer runway.

August moisture can still materially influence pod retention and pod fill well into the second half of the month.

The Setup

We are getting closer to the point where the market has to decide whether this is simply a good national crop with a few regional problems, or whether western Belt dryness begins pulling enough bushels out of the balance sheet to matter.

For now, the eastern Belt looks good enough to provide a substantial cushion.

But with corn ratings slipping to 61% and soybean ratings to 63%, the market can’t completely dismiss August weather anymore.

The next couple rounds of rain, particularly across western Iowa, Minnesota and the Dakotas, should tell us considerably more.

Walk-Squawk Morning Wire

Walk-Squawk — Mon, 03 Aug 2026 11:23:51 GMT

Macro Desk: The AI Trade Gets Stress-Tested, Not Broken

Markets are coming out of one of the most violent momentum unwinds in recent memory, but the bigger economic and earnings story has not changed nearly as much as the price action suggests.

The last several sessions were defined by forced selling, hedge-fund de-grossing, and a sharp reversal in many of the market’s most crowded AI and technology trades. Funds reduced gross exposure between Monday and Wednesday at nearly the fastest three-day pace on record, trailing only the COVID selloff and the 2021 meme-stock squeeze.

Technology, discretionary, and financial stocks absorbed much of the pressure. AI beneficiaries and global memory names were hit especially hard as investors rushed to reduce crowded exposure.

The average global hedge fund is now down roughly 1.4% for the month, while U.S. long-short funds have lost around 2.6%. However, both groups remain solidly positive for the year.

That distinction matters.

This looks more like a major positioning reset than evidence that the economic or AI investment cycle is collapsing.

Earnings Are Strong, but the Bar Is Extremely High

Roughly 86% of S&P 500 companies reporting so far have exceeded earnings expectations, putting this season on pace for the strongest beat rate in several years.

The problem is that simply beating estimates is no longer enough.

Microsoft delivered accelerating Azure growth and stronger cloud demand. Amazon also posted another cloud beat and raised its long-term capital spending outlook, with management suggesting demand could remain strong through 2028.

Those reports reinforced the idea that the AI compute buildout remains intact.

Investors are now demanding more than higher spending, however. They want proof that AI investment is producing revenue growth, margin expansion, and operating leverage.

Microsoft may have delivered the clearest evidence so far. Azure growth accelerated to 43% in constant currency, Microsoft 365 Copilot surpassed 30 million paid seats, and the company maintained operating leverage despite elevated AI infrastructure spending.

The AI debate is therefore shifting.

The question is no longer simply whether hyperscalers are spending too much. The question is whether those investments can generate acceptable returns.

Morgan Stanley estimates that GPU infrastructure, model APIs, and owned data-center capacity could produce returns on invested capital ranging from roughly 25% to more than 50%. In that framework, compute capacity is becoming the scarce asset, not the AI models themselves.

Still, companies that fail to demonstrate a clear monetization path are being punished quickly. Apple beat revenue expectations but disappointed on Services growth, while other high-multiple names showed how little tolerance remains for even modest execution misses.

This earnings season is rewarding certainty and punishing hesitation.

The Fed Creates More Questions Than Answers

The Federal Reserve held rates steady at 3.50% to 3.75%, but the decision included three dissents in favor of a 25-basis-point hike.

That 9-3 vote shows that parts of the committee are becoming increasingly concerned about inflation.

Chair Kevin Warsh offered little forward guidance, emphasizing the need to separate temporary noise from lasting inflation signals. The lack of clarity left investors trying to determine whether the Fed is preparing to hike again or simply trying to preserve flexibility.

Morgan Stanley continues to expect the Fed to remain on hold through the end of the year.

That view is based on expectations that tariff-related inflation will fade, shelter inflation will continue to soften, and higher oil prices will have limited second-round effects.

However, persistent inflation could still bring a September hike back into play.

The key point is that the bar for another rate increase may be higher than markets initially feared, but the Fed is not closing the door.

Policy uncertainty is likely to remain a source of volatility.

The Economy Is Slowing, Not Breaking

The broader macro data remains mixed but generally resilient.

Core PCE inflation was softer than expected, labor-market conditions remain stable, and private domestic demand continues to hold up. Headline GDP came in slightly below expectations, but there is still limited evidence that the economy is slipping into a major downturn.

Consumer spending also remains healthy.

Visa and Mastercard both reported payment-volume growth near 9% to 10%, with cross-border and online spending remaining particularly strong. Consumers continue to prioritize travel, services, and experiences, even as spending on housing-related durable goods remains weak.

That supports the view that economic growth is cooling around the edges rather than falling apart.

From Momentum to Quality

The market may now be moving into a broader quality rotation.

Morgan Stanley favors companies with strong balance sheets, high free-cash-flow yields, stable earnings, and healthy margins. The firm also believes AI adoption could eventually add around 100 basis points to corporate margins through 2027.

That would support a broader group of AI adopters, not just semiconductor and infrastructure companies.

The near-term risk is that oil, interest rates, or geopolitical escalation create another period of consolidation. Morgan Stanley believes those risks could potentially pull the S&P 500 toward 7,000.

But beneath the volatility, median-company earnings growth has accelerated to roughly 17% this quarter, providing a healthier foundation than the index-level price action may suggest.

Bottom Line

This was a painful momentum unwind, but it does not yet look like a fundamental breakdown.

Crowded positions were forced out, hedge-fund leverage declined, and many of the market’s strongest trades went through a major stress test.

The AI infrastructure cycle remains supported by strong cloud demand, growing enterprise adoption, and continued hyperscaler spending. The economy is slowing but still expanding, while earnings growth remains resilient.

The market is simply becoming more selective.

Higher capital spending alone will no longer be enough. The next phase will likely reward companies that can convert AI investment into measurable revenue growth, stronger margins, and sustainable returns.

For traders, the important question is not whether the old momentum leaders immediately return to their highs. It is whether the recent selling created a healthier setup for quality technology, hyperscalers, and companies showing real AI monetization.

The trend may still be intact, but conviction is now being tested through execution rather than optimism.

Grain Desk: China Steps Back Into U.S. Beans as Funds Pile Into Length

Friday’s cash trade finished quietly, but the bigger story heading into the weekend was renewed Chinese interest in U.S. soybeans and a surprisingly aggressive build in managed-money length across corn, soybeans, and wheat.

U.S. Cash Market

The U.S. interior cash market was mixed, with corn basis mostly steady and soybean bids showing more movement.

Corn bids were generally unchanged across Iowa, Illinois, Indiana, and Ohio. A few eastern processors adjusted basis, with Cloverdale improving 5 cents while Fort Recovery weakened 5 cents. River bids softened slightly, including the Ohio River down 2 cents and nearby Illinois River bids down 2 cents.

Soybean basis was more active. Sioux City strengthened sharply, up 25 cents for nearby delivery and 32 cents for August. Manning and Sergeant Bluff improved 10 cents, while Decatur, Illinois weakened roughly 9 to 10 cents. The Ohio River was also softer, particularly for deferred movement.

CIF Gulf bids were slightly weaker for nearby corn and soybeans, but December soybean bids improved 4 cents. Cash crush margins remained strong near $3.25 per bushel, with crushers reportedly well covered through August.

South America

South American cash trade was mostly inactive Friday.

Brazilian soybean offers were steady for August, September, and October, with no reported trades. September Brazilian soymeal firmed $1, while September and October soyoil offers strengthened by 70 to 100 points.

Argentina was similarly quiet. Soymeal offers gained $2 for August and September, while soyoil firmed 50 to 100 points across the nearby positions.

Brazilian corn also reported no trades. Mato Grosso’s safrinha harvest reached 96.77%, essentially matching the 15-year average of 96.78% and running just ahead of last year. That means Brazil’s second-crop harvest is nearly complete, keeping fresh supplies available to the export market.

What Has China Been Doing?

China reportedly booked at least 14 cargoes of U.S. soybeans, including eight from the Gulf and six from the Pacific Northwest.

That is the clearest demand signal in the report and helped soybeans recover from their Friday lows despite favorable Midwest rainfall.

USDA also announced a separate sale of 252,000 tonnes of U.S. soybeans to unknown destinations for the 2026/27 marketing year. The buyer was not identified, but the timing fits with the broader talk of Chinese demand.

China’s domestic processing markets remain relatively soft. Domestic soybean oil prices fell 140 to 150 yuan from the previous week and are now roughly 4% to 5% below their March highs. Soymeal values declined another 30 to 70 yuan and sit nearly 11% to 13% below the March peak.

Domestic corn prices were mixed. Jilin and Henan firmed slightly, while Shandong and Guangdong weakened. Compared with last year, however, Guangdong corn remains nearly $20 per tonne higher, suggesting regional feed demand and available supplies remain uneven.

COT: Funds Bought Nearly Everything

The latest Commitments of Traders report showed managed money adding substantial length through July 28.

Managed funds increased their corn net long by 75,490 contracts, taking the position to 168,399 contracts long. That was nearly 30,000 contracts longer than expected and was the biggest surprise in the report.

Soybean length increased by 30,101 contracts to roughly 155,000 contracts long. Soymeal length rose another 13,503 contracts, while funds reduced their soyoil long by 15,493 contracts.

Combined, managed money’s net long across the soybean complex increased by 28,100 contracts to approximately 353,500 contracts. At the same point last year, funds were short more than 103,000 contracts.

Wheat also saw major buying. The combined managed-money position across Chicago, Kansas City, and Minneapolis wheat increased by 21,100 contracts to 34,200 contracts long, compared with a net short of more than 130,000 contracts last year.

The Takeaway

China’s return for at least 14 U.S. soybean cargoes is supportive, particularly as the market moves closer to the normal U.S. export window.

The risk is positioning.

Funds are now heavily long corn, soybeans, and the broader soy complex. That gives the market buying power when demand headlines appear, but it also leaves grains vulnerable to liquidation if Midwest weather stays favorable or Chinese buying fails to continue.

For now, China is providing the demand story, while weather and crowded fund length remain the main obstacles to a sustained rally.

NASDAQ: SNEX