Bond And Oil Prices Move Higher
U.S. 10-year Treasury notes rose back near 7-month highs
today, after Fed Chairman Ben Bernanke said today that housing is experiencing a
major correction and that inflation should slow down over time. Bernanke’s
comments come as private report from ADP said that the jobs number will miss by
over 30,000 positions, which would show a serious decline in the country’s
labour force. The government’s jobs number comes out on Friday, and could
seriously influence demand for the long-term bond note if it shows a significant
drops in the number of new jobs added to the force.
The dollar rose against the euro today, and rose slightly
against the yen, after Fed Chief Bernanke said that inflation pressure will
decline gradually over time. This fueled demand in the U.S. currency, as
the Fed is still keeping a vigilant eye over inflation, and would raise rates as
soon as it is needed. Currency trading over the summer heavily relied on
interest rates and inflation, as growing economies signal the need to raise
interest rates to contain inflation. Europe looks the most hawkish in its
inflationary views, while Japan and the U.S. have slim chances of actually
raising rates before the year is over.
Crude oil futures rose 1.3% to close at $59.45 after a spill
in Houston and a government report spurred supply fears. A report showed
that U.S. refineries are operating at their lowest levels since May, which
worried some investors, despite inventories resting well above 5-year averages.
Natural gas rose 4.1% in today’s training, as cold weather in the northern U.S.
raised demand for the futures energy contract.
Gold futures fell 2.6% on fears that low commodity prices will
contain inflation pressures. A slowing economy leaves little room to worry
about inflation, and, combined with the low price of oil, significantly affects
demand for the safe-haven futures contract. Copper futures fell 2.4% as
more and more news points to a slowing U.S. housing market, which is a major
consumer of the metal.
Softs traded mixed today. Cocoa was down fractionally,
coffee was up 0.2%, orange juice was up fractionally and sugar was up 2.5%.
Grains traded mostly higher today. Corn was up 4%, wheat
was up 5%, soy was up 2% and oats were up 1.5%.
Meats traded mostly lower, with cattle down 0.35% and
porkbellies down 0.8%.
Factory Orders Show Slight Decline In August (full
story).
Crude Oil Inventories Rise (full
story).
John Patrick Lee