Bonds Continue Falling on Sentiment Turnaround
U.S. 10-year Treasury bond prices fell for the second straight day, on
positive momentum gained from yesterday’s Citigroup announcement. The
multi-billion dollar investment from an Arab Emirate boosted investor sentiment
across the board, helping to rally the major indices and send bond prices back
from multi-year highs. Bonds typically rise on economic weakness and fall on
strength, so it’s clear that positive momentum has crept into the market this
week.
The dollar rallied today over the euro and the yen, boosted by positive
sentiment and rallying equities around the world, after a $7.5 billion foreign
investment into Citigroup was announced yesterday. The cash injection will go a
long way in letting the U.S.’s largest bank find its feet, following months of
industry-wide write-downs and losses. The dollar has been sinking on overall
negative U.S. economic sentiment, but this week’s equity rally led to dollar
gains today. The euro also rose versus the yen, as traders continue to enter the
carry trade.
Crude oil fell around 4% today, after a U.S. inventory report today showed
that U.S. energy supplies fell less than expected last week. Traders have been
worried that Q4 demand would far outpace supply, which led to crude hitting
all-time record highs just off $100 a barrel. Natural gas futures dropped over
4%.
Gold futures fell about 1% today, in line with a rising dollar and falling
crude prices. Gold normally trades inversely to the dollar and with crude oil,
which is exactly what happened today. Traders sold gold in favor of a strong
dollar and falling energy prices. Copper futures jumped just over 1%.
Grains were higher today. Soybeans rallied about 0.6%, and corn gained 1%.
Stocks surged for the second straight day, with financial stocks leading
the way. The Dow and S&P 500 gained more than 2%, while the Nasdaq jumped by
more than 3%. Click
here to read the rest of today’s
Stock Market Recap.
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