Bonds Fall on Mixed Data

U.S. 10-year Treasury bond prices fell back slightly today, after making
gains yesterday. Today, the U.S. released better-than-expected job, which
boosted trading confidence in the face of widespread negative economic
sentiment. Bonds rose steadily through the summer on negative sentiment, but
fell back on anticipation of the rate cut. Traders are also looking for an
additional cut from the Fed before the year is out, so it’s anyone’s guess as to
where bonds are headed next.

The yen sank versus the dollar and the euro today, as equity markets in the
U.S. regain nearly all summer losses. Equity strength has led to yen selling, as
traders borrow yen to invest in more profitable assets, like equities. The carry
trade dynamic has played a huge role in yen movements over the summer, as
traders buy and sell the Japanese currency on perceived market risks. The dollar
was up slightly versus the euro, but most of the action today surrounded yen
weakness. A positive jobs report also helped to boost the dollar.

Crude oil futures were slightly lower, despite a report that showed an
unexpected decline in U.S. energy reserves. Crude was consistently hitting new
record highs for the past few weeks, before falling back to consolidate. Dollar
weakness has also contributed to the rising prices. Traders are worried that Q4
demand could outplace supplies, which is also helping to boost oil prices.
Natural gas fell over 2% after a moderate rally yesterday.

Gold futures were down fractionally, as the dollar rose fractionally on the
yen. Gold normally trades inversely to the dollar and with oil, which is exactly
what happened today. Traders usually buy gold in the face of a falling dollar
and rising oil prices. Dollar strength versus the euro helped to push gold
prices slightly lower. Copper futures were up about 1% today.

Grains were mixed. Soybeans rose about 1%, while corn fell just over 1%.

Stocks fell on Wednesday, after Deutsche Bank announced it will
write-down losses of up to $3.1 billion related to the recent credit crunch.
However, despite the heavy losses, the company still expects to report profit
growth from a year ago. Click

to read the rest of today’s

Stock Market Recap

Economic News

ISM non-Manufacturing index grew at the
slowest pace in six months..