Bonds Continue To Fall, Oil Holds Its Ground
U.S. 10-year Treasury bond yields continued to rise today,
after a report showed that manufacturing in the Midwest increased more than
expected last month. That report challenges pervasive fears that the Fed
will be forced to cut rates before the year is out; a growing Midwest economy
would reflect a need to contain inflation. Bond prices have soared since
the end of June, when the Fed announced its decision to keep rates at 5.25%, and
rose even more after last week’s Fed meeting. This pullback could be seen
as a quick stabilization, or correction, after weeks of falling yields.
The dollar rallied against the euro today, extending gains to
their largest since February in the currency pair. An economic report
today showed that inflation might still be a worry for the Fed, which could
delay the rate cut that some investors feel is inevitable. The U.S. also
rallied against the yen on the inflation news. Interest rates have been
the focal point for currency traders through the summer, as the yen, euro and
dollar all vie for control of a market based on growth and inflation.
Crude oil futures rose nearly 0.4% after OPEC said that
Venezuela and Nigeria will cut production to curb the slide in oil prices.
Crude shot to record highs this summer, but have fallen about 20% since touching
those levels. Natural gas futures shot up nearly 5% as cold weather in the
Midwest and Northeast sparked early seasonal demand for heat.
Gold futures fell 1% as energy prices clung to recent gains.
Energy and gold have been trading hand-in-hand through the summer, and the trend
looks to stay the same, as investors seek safety in commodity futures in the
face of rising oil prices. Silver fell 1.6%, copper rose 1.6% and aluminum
fell 0.8%.
Softs traded moderately higher today. Cocoa was up 0.3%,
coffee was up 0.1%, orange juice rose 0.3% and sugar rose 2.8%.
Grains fell today. Corn fell 0.6%, wheat fell 0.5%, soy
fell nearly 1% and oats fell fractionally.
Meats traded mixed, with cattle down 0.3% and porkbellies up
1.8%.
Increase In Personal Income Outpaces Personal Spending Growth
In August (full
story).
John Patrick Lee