Why An Interest Rate Cut Was Not Needed
The Sept. 30 year bond
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and the Sept. 10-year treasury note
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20-day highs, on the heels of the much-expected announcement that
the Federal Reserve will leave interest rates unchanged. The 30-year bond broke
out above the 110 level and closed at 110.25, up .93. The 10-year note cleared
the 113 level to close at 113.31, up.62.
According to the Federal Reserve, the slow growth
in the U.S. economy has been caused primarily by weakness in the financial
markets and increased uncertainty related to problems in corporate reporting and
governance. Since March, the central bank has
said the risks were balanced but has now shifted its policy statement to
say that economic weakness is a greater risk to the economy than inflation,
leaving the door open for future cuts.
The Sept. S&P 500
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high at around the 911.00 level. It looked that way for a while, but after the
Fed report, the S&P retreated to the support level of 907 to 902. From
there it weakened at the last hour and fell further to 885.29, a loss of 17 or
1.88% on the day.
The Sept. Nasdaq
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started out very strong and seemed to have the potential to close positive after
trading in the positive zone and hitting the intraday high at 962. Then, like the
other markets, the Nasdaq sold off in the last hour of trade. The Nasdaq 100
futures closed at 912 down 31.50 or 3.34%.
Crude oil futures were steady today despite
mounting speculation about a possible U.S. attack on Iraq and news that Iraq
exports fell sharply last week.
On the New York Mercantile Exchange, September crude oil futures
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gasoline
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September natural gas futures
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$2.97 per 1,000 cubic feet.
At the Chicago Board of Trade (CBOT) where grains are traded, corn, wheat and
soybean futures were on the move once again after the whopping gains of the
previous session. Wheat for September delivery
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$3.56 3/4 a bushel; December corn
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a bushel; November soybeans
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On the Comex Division of the New York Mercantile Exchange, December gold
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