Bond Prices Move Back Up As Oil Sags
U.S. 10-year Treasury bond yields fell for the first time in
five days, after an ISM report showed that manufacturing growth slowed more than
forecast last month. Yields rose last week after reaching 7-month lows,
spurred on by the Fed’s decision to keep rates the same for two months in a row.
Bond prices have soared since June, when the Fed initially decided to maintain
the current rate level. Inflation does not look to be a worry for the Fed,
and some investors are even forecasting that the Fed will actually cut rates
before the year is over.
The dollar fell the most in a week against the euro, and ended
a rally against the yen after the ISM report showed that manufacturing growth is
slowing. This latest report from the U.S. gives investors even more clues
that the economy is slowing down, showing a weakness in the dollar against other
global currencies. Over the summer, the major currency pairs traded
heavily on rate-hike prospects, as inflation and economic growth remained
central in gauging a country’s overall economic worth. The dollar’s
prospects for a rate hike are slim, as are Japan’s; the ECB, however, has
maintained that rate hikes are probable for Europe before the year is out.
Crude oil futures fell 3% to close at $61.03 a barrel after
investors weighed an output cut from Venezuela and Nigeria. Initially, the
production slowdown worried investors, but after Saudia Arabia and other major
producers declined to slow output, investors quickly got over their fears.
Oil is down 20% from record highs earlier in the summer. Other energies
also fell, with natural gas down 3% and heating oil down 3%.
Gold futures fell today, down 0.2%, as the safe-haven metal
contract continue to trade in-line with energy. Investors seek out the
metal in the face of rising energy costs, and unload it as energy prices fall
back. Copper fell nearly 1% as the ISM report furthered fears that the
economy is slowing, which lessens demand for the commonly-used metal.
Softs traded mixed today. Cocoa was down 0.6%, coffee
fell 3.8% and sugar fell 3.6%. Orange juice, on the other hand, rose 1.2%
in today’s trading.
Grains traded mixed, but mostly higher. Corn rose 2%,
wheat rose 0.7% and oats rose 0.6%. Soy fell 0.4%.
Meats traded mixed today. Cattle rose 0.3% and
porkbellies fell 1.7%.
Manufacturing Sector Growth Slows In September (full
story).
John Patrick Lee