Bonds Ease Off Yearly Highs

U.S. 10-year Treasury bond prices fell back from more than 3-year record
highs today, as the U.S. equity markets were boosted by a Citigroup investment
from the UAE. The announcement of the cash injection into Citigroup led to
widespread positive sentiment surrounding the U.S. housing and credit market,
and a rally in the equity markets. Bond prices have been surging lately on
overwhelmingly negative economic sentiment surrounding the U.S. Despite the
short-term effect of the news, many traders are calling for a recession into

The yen sank against the dollar and the euro today, on announcements that Abu
Dhabi will be taking a major stake in Citigroup, to help stem subprime losses.
The $7.5 billion injection should help to write down major losses incurred over
the past few months, which have rocked the equity, subprime and currency
markets. The yen fell as traders gained confidence, and sold the yen to invest
in more risky and profitable assets. The euro fell slightly versus the dollar.
Most of the action today revolved around yen weakness. The dollar has been free-falling, as a combination of slow housing growth and
credit worries have led to traders predicting a recession for the U.S. economy.
Most traders are looking for at least one more cut of 25 basis points off Fed
funds rate before the year is out.

Crude oil futures fell over 3% today, after Saudi Arabia’s oil minister
announced that the country had increased production levels to the highest so far
this year. Traders have been worried that global supplies cannot keep up with
demand levels, which has sent crude prices to record highs above $99 a barrel.
Crude has been rallying since a minor correction at the end of the summer.
Natural gas futures rose just over 1%.

Gold futures fell nearly 2% today, in line with falling energy prices and a
dollar rebound. 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. Copper futures also dropped, down by more than 2%.

Grain prices fell today. Soybeans dropped over 1%, while corn fell about

Stocks surged on Tuesday, boosted by the news of large investments from
the Middle East. Click

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Stock Market Recap

Economic News

Consumer confidence fell to 87.3, versus
expectations of 91.