Bonds Fall On Inflation Data

U.S. 10-year Treasury bond yields rose to their highest levels
in 3 weeks today, after reports released today showed an increase in consumer
confidence and retail sales. Bond prices have shot up since June, when the
Fed initiated a rate hike pause. Since last week though, prices have
fallen as more and more reports are showing that the economy is not slowing as
quickly as was once thought. Investors have begun to scale out of bets
that the Fed is set to lower rates, after the minutes from the Fed’s last
meeting showed a definite lingering fear of inflation. Today’s reports
boosted investor sentiment that the Fed will not cut rates any time soon.

The dollar rose to new yearly highs against the yen today, and
rose to the highest levels since July against the euro. A government
report released today showed that sales excluding auto and building materials
rose the most last month since January. The dollar has notched 3 straight
weeks of gain against the yen and the euro, egged on mostly by promising reports
that the Fed is not set to cut rates in the coming months. The euro fell
slightly against the yen.

Crude oil futures rose 2% to close at $59.03 a barrel today,
after reports of demand increase in the U.S. and the shutdown of two oil
platforms, which represent nearly 10% of Norway’s exports. Crude has
fallen over 20% since its record July highs, which were brought on by
geopolitical crisis in the Middle East and North Korea’s missile tests.
Despite a cold snap in the Northern U.S., natural gas fell 2% after the Energy
Department announced Wednesday that U.S. inventories are at a record level.

Gold futures rose 1.9%, trading in step with oil. As
energy prices increase, so does the demand for safety in the commodities metal,
and oil’s rise today helped to trigger demand in gold futures. Gold has
fallen dramatically since its highs in May, helped along by the drastic drop in
oil prices. Copper rose about 1% in New York trading, but investors are
looking for a fall in prices next week, which could occur if China announces
disappointing growth numbers.

Softs mostly rose today. Cocoa was up 0.2%, coffee was
up 0.7%, orange juice fell about 0.25% and sugar was flat for the day.

Grains rose today. Corn rose 5.4%, wheat rose 1.9%, soy
gained 2% and oats fell about 1.5%.

Meats mostly fell today, with cattle down 0.3% and porkbellies
down 0.3%.

Economic News

University Of Michigan Consumer Sentiment Index Rises To 92.3
In October From 85.4 In September (full

John Patrick Lee