Bonds Continue Rallying

U.S. 10-year Treasury bonds rose today in a volatile trading session. Bonds have been rising steadily, as
investors worry that the credit market fallout will continue to spread to other
areas of the economy, leading to slower growth in the U.S. Federal fund futures
are pointing to a 100% chance of a rate cut during the September meeting, as
traders anticipate a Fed action to contain the lending problems.

The yen rose to over 4 month highs today against the dollar and the yen, as
the credit crisis continues to threaten traders and investors across the world.
Traders are buying back previously borrowed yen to cover riskier asset
positions, as global equities markets try to stabilize following weeks of
volatility and major losses. The yen gains as traders close their positions. The
dollar also rose against the euro, following some positive economic reports out
of the U.S. today. The dollar rose against the Canadian dollar, but fell on the British pound.

Crude oil futures rose about 1% today, after the Energy Department reported a
more than 5 million barrel drop in supplies, which was more than expected. With
hurricane season picking up, and more and more storms being formed in the
Atlantic, traders are worried about possible supply disruptions. Crude has been
falling steadily since the beginning of August, after nearing $80 a barrel.
Natural gas fell over 1% on speculation that there are no supply threats.

Gold futures rose fractionally, as the dollar kept gaining on the euro. Gold
normally trades inversely to the dollar and with oil; traders are betting that
the dollar is going to rise on the euro, and selling gold as a result. Economy
worries have also been helping to keep a lid on rising gold prices. Copper fell
to a 7-month low on worries that equity problems will spread and affect growth.

Grains were mixed today. Soybeans fell over 1% and corn rose about 0.2%.

Credit concerns continued to impact investors, as the fidgety markets lost
ground again on Wednesday. Despite the Fed’s injection of funds into the banking
system, the Dow and S&P proceeded to close down 1.3%, while the Nasdaq fell
1.6%. Click

to read the rest of today’s

Stock Market Recap

Economic News

Consumer prices rose 0.1% in July, the
least in 8 months.

Industrial production rose to 10-month high in July
for U.S.

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