Bomb Plot Hits The Market

U.S. 10-year Treasury yields moved up off of 1-month lows as
the government auctioned $10 billion worth of 30-year bonds. Bond prices
of all time frames moved lower today, as investors left the prospect for future
rate hikes open. An extremely dovish report on Tuesday would have removed
the floor for the treasuries, but the possibility of another hike in September
kept bond prices afloat.

The U.S. dollar rallied against the euro today ahead of a
government report tomorrow that could show that retail sales increased over the
month of July. The dollar has been struggling against both the euro and
the yen over the last weeks, as investors prepared for a pause in the Fed’s
tightening cycle. The ECB and BoJ’s prospects to raise rates remain on the
horizon, which is keeping continuous pressure on the dollar and the U.S. economy
to show growth and the need to raise rates. The dollar was basically
unchanged against the yen.

The energies fell across the board today. Crude oil fell
3% to close at $74.00 on news of the foiled terror plot in the UK.
Investors fear that the threats will adversely affect demand for travel and oil,
sparking a sell-off that left crude at 2-week lows. Natural gas also fell
hard today, closing down 1.6% on inventory news. Yesterday the energy
department showed a decrease in inventories, but the numbers are still well
above the 5-year average. With summer at an end, demand will surely calm
down, and large supplies will help to keep prices down.

The metals fell across the board as the drop in oil helped to
assuage inflation fears. Gold dropped 2.4% to close at $646 an ounce, as
the metal continued to parallel oil’s moves. Silver fell 3.7%.

The softs traded mixed to close the day. Cocoa was up 0.13%,
coffee was down nearly 2% and orange juice was up fractionally at 0.55%.

The grains traded lower for the day, with corn down 0.4%,
wheat down 0.4% and soy down 1%.

The meats traded mixed today, as cattle rose 1% and potbellied
pigs fell about 3.5%.

Economic News

Jobless Claims Come In Above Economist Estimates (full

Trade Deficit Narrows To $64.8 Bln In June (full

John Patrick Lee