Bonds Fall Despite Underlying Weakness

U.S. 10-year Treasury bond prices fell moderately today, despite dollar
weakness in the currency markets. Bonds are trading near yearly highs, on
worries that underlying U.S. economic housing weakness could derail the broader
economy. Bonds typically rise on economic weakness and fall on strength, so
traders are clearly set in an overall defensive position relative to the bond
market. Bonds could have fallen today as a continuation move, after Friday’s
extremely positive jobs report.

The euro fell versus the dollar initially, but then rose today. The euro was
basically flat against the yen. The euro initially fell on speculations that
euro strength would lead to lower exports for Europe. Traders basically sold the
euro off of extended highs, but underlying strength managed to keep the currency
rising. The dollar was down moderately against the yen.

Crude oil futures rose nearly 2% to close above $80 a barrel today, after
falling for the last 2 trading sessions. Crude is trading just off all-time
record high prices, kept up by steady demand and somewhat slim supplies. Traders
were initially looking for huge demand in Q4, coupled with weak supplies, which
sent crude prices soaring. Crude bounced back from a 10% decline to rally to new
record highs at the very end of the summer.

Gold futures rose about 0.5% today, pushing towards recent highs. Gold rose
today as the dollar fell. Gold normally trades inversely to the dollar and with
oil, which is exactly what happened today. Traders bought gold as a safety from
underlying dollar weakness. Copper futures were down fractionally.

Grains were higher today. Soybeans jumped 2.6% and corn rose about 0.8%.

All 3 major indexes hit new major highs today, ahead of the CNBC
Republican Presidential debate. Traders are anxiously awaiting for Alcoa
to report quarterly earnings. Click

to read the rest of today’s

Stock Market Recap

Economic News

U.S. retailers grew at the slowest level
in 5 months in September.