Bonds Ease on Factory Orders Report
U.S. 10-year Treasury bond prices fell today, after rallying yesterday. Bond
prices dropped today, after separate inflationary reports pointed towards
positive growth for the U.S. economy. A measure of bond risk dropped, and the
Commerce Department factor orders report dropped less than forecast. Bonds
usually fall on economic strength and rise on weakness, so traders took today’s
economic reports as a good thing for the U.S. economy.
The euro pulled back slightly today, on speculation that yesterday’s euro
run was overdone. The dollar also fell just slightly against the yen this
morning, after conflicting reports out of the U.S. Housing numbers came in
extremely weak, but other inflationary gauges pointed to growth and inflation.
The July 4 holiday in the U.S. seems to have slowed the trading action for the
day. The dollar gained over the Canadian dollar today.
Crude oil futures were fractionally higher today. Crude initially fell on
speculation that U.S. refinery capacity can handle summer demand, but prices
crept higher to close slightly up. Crude has been on the rise since May, with
prices now settling above $70 easily. Natural gas futures were fractionally
lower today.
Gold futures fell about 0.5% today, on speculation that the euro rally
over the dollar is stalling. Gold usually trades inversely to the dollar and
with oil; today’s gold trading centered around speculation of coming dollar
strength. Gold has also been trading closely with interest rates, as rising
interest rates make the precious metal less attractive to safety investors.
Grains traded mixed today. Soybeans were up 5.7%, wheat was flat and corn
dropped about 2.8%.
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John Lee
Associate Editor