Housing Numbers Highlight U.S. Weakness

U.S. 10-year Treasury bond prices rallied today, after the U.S. released disappointing new-home sales numbers today. U.S. sales of new homes fell to 12-year lows in November, prompting investors to buy into the safety of the long-term government debt. Bonds typically rally on economic weakness and fall on strength, so it's clear that traders have positioned themselves defensively heading into the new year.

The dollar fell against the euro and the dollar today, after the U.S. released a housing report that showed new home sales fell to a 12-year low last month. The terrible housing news drove the dollar closer to recent record lows versus the euro. The dollar had a rough year versus the euro, falling dramatically on credit, housing and economic growth concerns. The euro was down slightly versus the yen, but most of the action today surrounded U.S. negative speculation.

Crude oil futures fell about 0.6%, giving up morning gains on basically no news. Crude rallied through the morning on a continuation move following yesterday's rally on falling inventories, but suddenly reversed mid-day and closed lower. Traders could find no real reason for the drop in prices. Natural gas prices rallied over 2% today.

Gold futures rallied over 1% today on dollar weakness and rising oil prices. Gold normally trades inversely to the dollar and with crude oil, and today, traders focused on dollar weakness and high energy prices, and bought gold as a safety against those factors. Copper futures dropped about 1.5%.

Grains were lower today. Soybeans fell nearly 4%, while corn dropped about 0.5%.