Equities Down, Bonds Up

U.S. 10-year Treasury bond prices rose further today, as traders speculate that slowing growth will lead to an overall economic slowdown. Shaky equity markets also contributed to rising bond prices, as traders bought bonds as a safety from equity risks. Bonds have been rising steadily since the beginning of July, when the subprime mortgage problems began to spread through the economy. Bonds typically rise on economic weakness and fall on demand, so traders are taking a defensive position in this weakening market.

The yen rose today against the dollar and the euro, as global equities remain on shaky footing. Japanese and European markets managed to stay just in the green, but U.S. equity weakness on the open has helped to heighten fears that a global economic slowdown is on the way. The yen gained, as traders covered positions by buying back previously borrowed yen, in the so-called carry trade. Lately, the yen has been trading inversely with global equity markets, on the carry trade dynamic. The euro also fell against the dollar today. In general, global equity markets have had a large hand in directing currency movements over the past few weeks.

Crude oil futures fell about 0.7% today, giving up some gains after yesterday's rally on falling gasoline reserves. Crude oil has been falling since the beginning of August on concerns that slowing U.S. growth will equate to slowing energy demand. Natural gas futures were up slightly.

Gold futures fell about 0.3% as the dollar rallied on the euro. Gold normally trades inversely to the dollar and with oil, which is exactly what happened today. Traders sold gold in the face of dollar strength and falling oil prices. Gold futures have been trading within a fairly tight range since before April of this year. Copper futures were fractionally changed today.

Grains were mixed. Soybeans gained over 1%, and corn fell slightly.

Stocks closed mixed on Thursday, with the NASDAQ closing fractionally higher, while the Dow & S&P 500 gave back some of yesterday's gains. Click here for the rest of today's Stock Market Recap.

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