Bonds Fall After Inflation Comments From The Fed
U.S. 10-year Treasury bond yields rose today, moving away from
recent 7-month lows. The Vice Chairman of the Fed today said that he was
worried about inflation after the close yesterday, and those comments fueled
speculation that the Fed will not need to cut rates before the year is out.
Bond prices have shot up since June, when the Fed initiated its first rate-hike
pause in 17 meetings, which was followed by another pause in September.
Investors might have jumped the gun on assuming the Fed is set on lowering
rates, and the rise in the yield reflected that sentiment.
The euro fell hard today against the yen and the dollar today,
despite a rate hike from the ECB. The President of the ECB said that
another hike could be likely for this year, but refused to comment specifically
on the new year. Investors took this as a sign of future weakness in the
euro, and the euro sold off against the dollar and the yen immediately after.
Crude oil rose 1% to close at $59.99 a barrel today on
speculation that OPEC will cut production this month to cool energy price
losses. Investors are worried that a cut in the supply of global oil will
drive prices higher, after oil fell over 20% from its record July highs.
Natural gas continued to climb today, rising 5.3% on expectations that cold
weather will drive more demand for the energy futures contract.
Gold futures rose 1.6% to lose at $571 an ounce today, as the
rising price of crude fueled demand for the safe-haven metal. Gold has
been trading lock-step with oil through the summer, as energy fears fueled
demand for safety commodities. Since May highs, gold has declined around
20%, in line with oil’s late-summer decline. Copper traded basically flat
today, after the Vice President of the Fed cooled worries that the U.S. economy
is slowing significantly, by claiming that inflation was still a concern.
Softs traded mixed today. Cocoa was up 1.8%, coffee was
up fractionally, orange juice fell 1.6% and sugar fell fractionally.
Grains traded mixed as well. Corn was down 0.9%, wheat
was down 0.2%, soy rose 1.8% and oats rose 1.6%.
Meats traded higher today, with cattle up 0.4% and porkbellies
up 2%.
Jobless Claims Show Notable Decline (full
story).
John Patrick Lee