Bond Yields Hit 6-Month Yield Low

U.S. 10-year Treasury bond yields fell to 6-month lows today
after a manufacturing report from the Philadelphia area showed that growth is
slowing faster than expected. This data sent yields plummeting and bond
prices soaring, compounded by the Fed’s decision to keep rates at 5.25%.
With this new data out and yields dropping fast, investors are beginning to
price in a rate cut that could happen before the year is out. The U.S.
economy is showing definite signs of a slowdown now, and the bond market is
reacting violently.

The dollar fell the most in two months against both the yen
and the euro, after the Philly Fed report showed a serious slowdown. The
report comes on the heels of economic reports early in the week that pointed to
a slowdown, and the Fed’s decision to keep rates the same during yesterday’s
meeting. The euro/yen pair moved moderately against the euro, but most of
the action concerned the dollar and investors’ concerns that the U.S. economy is
slowing down.

Crude oil futures rose 1.4% to close at $61.60 on concerns
that the U.S. will push for sanctions against Iran. Iran produces about
1/5 of the world’s crude supply, so sanctions against Iran could put the global
supply in danger. Crude has fallen nearly 20% during this month, amid a
cooling geopolitical scene and an ample supply of inventories. Natural gas
fell nearly 3% on ample inventories; the futures energy contract is trading at
2-year lows.

Gold futures rose 0.4% as the dollar plunged and oil rebounded
from recent lows. The safe-haven futures contract trades heavily in step
with oil and the dollar, so a move could be expected in the metal if the dollar
continues to fall and oil begins to climb higher. Silver also rose today
on the dollar’s fall.

Grains traded mostly higher today as rain and cold buying legal testosterone propionate online in australia weather
hamper the harvest season in the Midwestern United States. Corn was up
3.3%, wheat was up 3.3%, soy was up 1.6% and oats were up 1%.

Softs traded mixed today. Cocoa was up over 4%, coffee
rose 1.5%, orange juice fell 0.5% and sugar plunged 4.6%.

Meats traded moderately mixed, with cattle up 0.3% and
porkbellies down 0.5%.


Philly Fed Index Shows Unexpected Contraction In September (full

John Patrick Lee