Bonds Continue To Fall On Inflation Speculation
U.S. 10-year Treasury bond notes fell to a 3-week low today,
on speculation that a retail sales report on Thursday will show that sales
increased during the month of September. The jobs report last week spurred
speculation that the economy could be slowing less than previously thought,
which sent demand for the long-term government bond plummeting. Bond
prices have risen dramatically since June, when the Fed held overnight rates at
5.25%, but have fallen sharply over the past two trading days on positive
economic news and speculation.
The dollar reached its highest levels since December over the
yen today, as investors cut buts that the Fed will reduce rates before the year
is out. With a positive jobs report last week, and speculation that retail
sales could come in higher than expected, global investors are viewing the
dollar favorable. The dollar rose to its highest levels since August
against the euro today, as more investors looked upon the U.S. currency
Crude oil futures fell 1.6% to close at $58.99 after Saudi
Arabia did not heed OPEC’s call for a reduction in output by notifying refiners
in Asia to expect the normal supply for the month of November. OPEC has
publicly called for a reduction of 1 million barrels a day starting November
1st, which prompted supply fears in many investors. The tactic worked for
a few days, but oil struggled to stay above $60 before plummeting more.
Oil is off of its record July highs by about 25%. Natural gas rose
1.1% today, as a cold front hits the Midwest and Northern parts of the U.S.
Natural gas is used to heat and cool homes, and demand usually increases with
extreme weather forecasts.
Gold fell 1.1% to close at $576.20 as the dollar strengthened
in the global economy. With a strong U.S. economy and dollar, less
investors turned to the metal to seek safe-haven, which sent its demand lower.
Gold also traded lower with oil, as the two futures contracts have traded
closely through the summer, with energy fears directly linked to the safe metal.
Copper traded lower today on speculation that the U.S. economy is slowing less
than previously thought.
Softs traded mostly lower across the board. Cocoa was
down 0.3%, coffee was down 0.2%, and orange juice was down 0.4%. Sugar,
however, rose about 1.5% in today’s trading.
Grains traded mixed today. Corn fell 4.8%, wheat rose
1.4%, soy fell 2.4% and oats fell nearly 3%.
Meats fell across the board, with cattle down 0.6% and
porkbellies down 0.5%.
John Patrick Lee