Bonds Flat on Rosy Housing Report
U.S. 10-year bond prices fell fractionally today, consolidating after a
nearly month-long run up. Bonds have been moving steadily higher, on widespread
fears that economic growth will slow because of the credit crunch. Equity
markets have corrected significantly in the past weeks, and bonds have risen, as
a subprime mortgage problem grew into a widespread credit and lending cash
crunch.
The dollar fell against the euro, but was flat against the yen, after a U.S.
government report showed that new home soles rose unexpectedly during the month
of July. The dollar has been wavering near record lows against the euro, and
today’s slide took a big step towards new record lows. The yen has been trading
inversely with equities, as traders play the carry trade, borrowing yen based on
perceived market risk. Overall, the big news lately has been the worldwide
credit crunch, bringing the yen into focus as traders continue to find a balance
to the so-called carry trade. The dollar fell against the Canadian dollar and the British pound.
Crude oil futures rose 1.6% today, after a U.S. housing report showed an
unexpected increase in new home sales during July. Crude has fallen dramatically
since the beginning of August, when subprime mortgage problems began to
seriously erode investor confidence in the U.S. economy. Today’s spike seemed to
be directly linked to the positive housing report, which helped boost overall
economic sentiment. Natural gas futures fell over 1% on comfortable supply
levels.
Gold futures rose over 1% today, as the dollar fell against the euro. Gold
normally trades inversely to the dollar and with oil; today’s gold action was
dominated by dollar weakness, despite a positive housing report. Copper futures
rose nearly 2% on the positive housing numbers.
Grains were mixed today. Soybeans rose about 1%, while corn dropped over 1%.
U.S. stocks continued to climb higher, as positive housing data outweighed
fears concerning the credit market. Click
here to read the rest of today’s
Stock Market Recap.
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