Bonds Fall on Rate Cut, Dollar at New Lows

U.S. 10-year Treasury bond prices sank today, after the Fed cut two key
interest rates to deal with a slowing economy. Bonds nearly touched recent
yearly highs in the last week, but today’s rate cut seems to bode lower prices
for bonds. Bonds typically rise on economic weakness, and fall on strength, so
traders took today’s double rate cut as a positive sign for the intermediate
term future of the U.S. economy.

The yen sank today versus the dollar and the euro, as equity markets in the
U.S. rebounded, and the Fed cut the Fed funds rate and the discount rate. The
yen slumped as traders entered the carry trade, borrowing yen to invest in more
profitable assets. The dollar pushed into new lows versus the euro after the
rate cuts were announced. The dollar was down slightly on the Canadian dollar, and also fell versus the
British pound.

Crude oil hit new record highs today, rising more than 4% intraday. Today, an
energy report was released that showed an unexpected decline in crude reserves,
exacerbating worries that U.S. demand is outpacing supply. Despite a letter to
investors at Goldman to start taking profits, oil kept moving higher today.
Natural gas futures rose nearly 4% today.

Gold futures also shot higher, rising 0.7%. Gold normally trades inversely to
the dollar and with crude oil, which is exactly what happened today. With the
dollar finding new lows, and oil rallying, traders bought gold as an overall
safe-haven. Copper futures fell about 0.3%.

Grains were higher today. Soybeans rose about 3.6%, while corn gained 1.5%.

Stocks closed higher on Wednesday, as the Federal Reserve cut interest
rates by 25 basis points. Click

to read the rest of today’s

Stock Market Recap

Economic News

Q3 US GDP rose by 3.9%.

The Fed cut the
Fed funds rate by 0.25%, and also the discount rate by 0.25%.