What Did The Administration Say That Moved The Dollar?

  • May 12, 2003
  • Edward Allen

Equities and Treasuries were
both strong today–
much to Mr. Greenspan’s delight, I’m sure. The dollar
continues its slide after remarks by senior US officials were interpreted by the
markets to mean that the administration won’t defend a weakening dollar.

Equities

The equity markets were stronger today on decent
breadth. Technology led the way after Lehman upgraded its outlook for Cisco–the
Nasdaq index futures contract
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The S&P 500 contract
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and the Dow
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finish at 8700.

Fixed Income

Treasuries finished firm on the day as the market
continues to expect lower interest rate for the time being. This belief was
fueled by a weekend newspaper article by noted Fed-watcher and Washington
Post columnist John Berry, highlighting his perceived likelihood of a
rate cut ahead. The 10 year futures contract
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up 085 to close at 116-315 as mortgage lenders sought to offset refinancing risk
by purchasing the note; the 30 year
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Metals

One sign that more investors are betting that
rebound in the US economy is imminent, was today’s jump in copper to six-week
highs–copper
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other goods that would benefit from economic strength. As a result, the
industrial metal was up by 1.35 to close at 75.20 while
aluminum
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again
benefited from a weaker dollar and closed higher by 3.00 to close at 351.90. Silver
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Energy

Despite a strong open by crude oil, it finished
lower on the day as traders looked to realize profits on the long positions.
June crude
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supply even more scare. At the close, it was trading up .177 to close at 5.983. 

Currencies

The dollar was lower across the board after the
US Treasury Secretary commented that a weaker US currency is helping the
economy, which was interpreted by the market to mean that the administration is
comfortable with a weakening currency. The current short US dollar interest on
the IMM is at its highest since November of last year. The USD index
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down .44 and
finished at 94.72.