Bonds Ease on Mixed Data

U.S. 10-year Treasury bond prices eased today, after initial jobless claims
fell last week. Despite a $30 billion Fed injection for the banking systems,
bonds slid on positive economic sentiments. Bonds have been hovering near
5-month lows, on overall economic concerns that the housing market slowdown will
spread to other areas of the economy. The recent credit meltdown sent bond
prices soaring, as investors scrambled for safety in a shaky equities market.

The euro rose against the dollar, and the dollar was down mostly after a
government report showed that mortgage foreclosures were at a record high during
Q2. The euro was also up slightly against the yen, while the
dollar was down fractionally versus the yen. The European Central Bank and the BoE both kept rates steady today. ECB President Trichet said in the policy
comments that inflation risks “lie on the upside,” reinforcing speculations that
the ECB will raise interest rates again before the year is out. Lately, the yen has been trading inversely with global equity markets, on the
carry trade dynamic. In general, global equity markets have had a large hand in
directing currency movements over the past few weeks.

Crude oil rose about 0.8% to 5-week highs today, after U.S. oil and gasoline
inventories came in lower than expected today. Gasoline reserve levels fell to
the lowest levels in nearly 2 years. Crude oil fell more than 10% during the
beginning of August on economic worries, but price have almost completely
recaptured all of those losses. Natural gas futures fell nearly 3% as stockpiles
hit a new record for August.

Gold rose about 2% on dollar weakness. Gold normally trades inversely to the
dollar and with oil. Today’s dollar weakness led to gold selling, as traders
hedged against further U.S. economic and currency weakness. Copper futures rose
about 1% on positive U.S. economic growth sentiment.

Grains fell today. Soybeans dropped just over 1%, and corn fell nearly 2%.

Stocks closed modestly higher on Thursday, after a mixed morning session.
Early gains, due to several retailers reporting strong August sales, were erased
following the release of mortgage foreclosure data by the Mortgage Bankers
Association. However, the selling was short-lived, helped by positive economic
data from the Labor Department, and the market remained comfortably in positive
territory for the rest of the day. Click

to read the rest of today’s

Stock Market Recap

Economic News

Initial jobless claims fell more than
expected last week, but the number of Americans continuing to receive
benefits rose to 6-month highs.

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