We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., Goods Trades Balance Adv, Retail Inventories Ex Autos MoM Adv, and Wholesale Inventories MoM Adv. At 7:30 A.M., S&P Global Composite PMI Flash and S&P Global Manufacturing Manufacturing PMI Flash, and S&P Global Services PMI Flash at 8:45 A.M., New Home Sales and New Home Sales MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction and 2-Year FRN Auction at 10:30 A.M., 5-Year Note Auction at 12:00 P.M., Dairy Products Sales at 2:00 P.M., Fed Bowman Speech, Building Permits Final, and Building Permits MoM Final at 3:05 P.M.

The Federal Reserve reported that the US M2 money supply in June swelled to a 16-month high of $21,025, Billion. This marked the 4th consecutive month that M2 growth and the 3^rd consecutive month that M2 was above a year ago.In March the last year economists and traders have fretted about year-over-year declines in the money supply of 3-4%, which had been the largest since the Great Depression. While December 2022-March 2024 was the longest period of year-over-year contraction, those declines minuscule compared to the 10-25% increases that occurred for 24 consecutive months from 2020-2022. The June M2 figure was 16% higher than June 2020 and was 36% larger than February 2020, just ahead of the pandemic.  The M2 increase will make the fight against inflation more difficult ahead 2025. Just another dismal policy from an administration that cover’s up how bad buying groceries and living day-to-day. Just another failure in every faze of the game.

Photo by Jesse Gardner on Unsplash

Central US Weather Pattern Discussion- Extreme Heat Blankets Plains Next Week; Central US Precipitation Lacking into Aug 7: The GFS is overdone with its call for max temps of 108-113 in OK,KS, NE, SD, IA, and MO next July 31-Aug 76, but there is  an agreement that much warmer pattern impacts the Central US beyond the coming weekend. The EU model’s high temp outlook on July 31, has temps existing in the upper 90’s/low 100’s across the Southern & Central Plains and southwestern Corn Belt throughout next week, and likely into Aug 5-6. Some 14-15 Mil acres of corn and 10-12 Mil/acre of soybeans will be exposed to rapid soil moisture evaporation. The coming expansion of Midwest high pressure Ridging will hold in place a pattern of complete dryness outside the Southeast US into July 29^th . Ridge-riding storms are hinted across the Great Lakes/ E Midwest in early August is possible.

July to August Yield Changes

The August USDA crop report takes on greater significance as the job of forecasting crop yield/production is handed off from WASDE analysts to NASS statisticians. The National yield in the May-July WASDE reports is based on modeling from historical yields, planting dates, and climate variables. The NASS estimates in August are based on farmer surveys for soybean/corn yields, with field surveys conducted for the September report.  Looking back at the long-term history of NASS August soybean yields, there has been a slight bias for NASS to lower yields from the July WASDE. Since 1974, the NASS yield has declined in 25 years, or 50% of the time, by an average of 1.4% BPA. In 21 years (42%), the yield has been higher by an average of 1.3 BPA and the remaining 4 years the August soybean yield has been unchanged. The largest yield decline came in 2012 when the NASS yield 4.4% BPA below the July WASDE. There have been five years that the August yield increased by more than 2 BPA and eight years the yield declined more than 2 BPA.

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