Bonds Fall Further, Gold Bounces

U.S. 10-year Treasury bonds continued to fall
today, on expectations of positive, inflationary reports to come later this
week. Bonds have been falling steadily since the beginning of May, when the Fed
held rates and came out with hawkish language against inflationary pressures.
Traders are betting that there is little to no chance of a rate cut this year by
the Fed, and some traders are even beginning to start looking for a hike.

The dollar continued to gain on the euro
today, and was up fractionally against the yen, on continued positive outlooks
for the U.S. The case for strong U.S. economic growth has been gaining
momentum lately. Early in May, a string of turnaround economic reports, like
retail sales and job growth, helped to trump severely negative revised GDP
numbers. Since then, the dollar has been pushing off of lows against the euro,
and moving to recent highs over the yen. Traders bought the dollar today, on
speculation that a number of major economic reports due out this week will
prove to be positive. The euro also fell against the yen today. The U.S.
dollar was near flat against the Canadian dollar, holding steady after falling
steadily for over 2 months.

Crude oil futures jumped 1.8% today, after
Saudi Arabia told Asian refiners to expect a smaller than usual shipment in
July. Investors speculate that Saudi Arabia is doing to to control supplies on
the market, and to keep prices stables. Crude oil trades very sensitively to
any major news from the Middle East that could potentially disrupt supplies.
Last summer, trouble with Iran sent crude prices to their highest levels on
record. Natural gas futures fell around 0.4% today on comfortable supply
levels and balmy weather.

Gold futures rose 1.2% today, after falling to
12-week lows on Friday. Gold slumped last week on rising interest rates, as
traders bet that the attractive interest rate yields would lead to investors
shying away from precious metals. With oil on the rise, gold pushed higher
today. Copper futures rose over 3% on strike and supply worries.

Grains all moved higher today. Soybeans rose
1%, corn jumped 3.6%, and wheat rose 5.6%.


No major economic
news to report for the U.S. today.

John Lee

Associate Editor