What Was Unusual About Today’s Session
It’s not every day that the
markets see Treasuries and equities move higher together, but at least for
today, Mr. Greenspan managed to have his cake and eat it too, as the Fed left
rates unchanged while adopting an easing bias. The big loser today was the US
dollar, which was sold off by investors seeking to capture higher yields abroad.
Equities
Equity investors spent the better part of the
afternoon–post fed announcement–trying to decide what the easing bias meant
for stock prices. But in the end, all of the indices finished up on the
day–though off their highs. The tech sector led the charge, as the markets were
betting that business spending (half of which goes to tech) will improve as a
result of lower cost of capital (higher equities and lower rates). As a result,
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 8575.
Fixed Income
Treasuries were negatively affected by the
tepidly received 3 year Treasury auction–the $22 billion sales drew a 1.96 bid
to cover ratio–but later surged as the fed signaled that it may keep on
lowering interest rates down the road. The 10 year futures contract
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was up 220 to close at 115-230; the 30 year
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up 190 to close at 114-090.
Metals
Gold
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dollar higher today on the back of a weaker US dollar, but certainly not by the
amount one would expect. The precious metal finished up .2 to finish at 342.80 while silver
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industrial metals were higher in sympathy with the equity markets. Copper
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.60 to close at 72.40 and aluminum
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.6410.
Energy
June crude was down in anticipation of a strong
showing for tomorrow’s inventory data–expected to come in between 1.8 and 2.6
million barrels. And the contract was down .77 to close at 25.72
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Natural gas futures
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by.121 to close at 5.568.
Currencies
The dollar was the big loser today as investors
are now anticipating that US yields will yield lower interest in the month
ahead– relative to the other currencies. The USD index
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.95 and
finished at 95.58.