Bonds Halt Slide, Oil On The Rise
U.S. 10-year Treasury bonds rallied off of 3-week lows, on
expectations that this week will bring negative economic news that will
highlight a slowing U.S. economy. Bonds shot up in June, when the Fed decided
to halt its rate-tightening cycle, on fears that the U.S. economy is slowing.
Prices then began to fall about three weeks ago after economic reports showed a
positive jobs report, followed by other reports pointing to a healthy U.S.
economy. However, with prices at a 3-week low, investors took advantage of a
better price, as consensus that the economy is slowing remains wide-spread.
The dollar fell against the yen the most in two weeks, and
also fell moderately against the euro, after Russia announced that it was adding
the yen to its foreign-exchange reserves. The yen has been at record lows
against the dollar, and Russia’s announcement gave the struggling currency a bit
of strength in the global market. The move down troubled some investors, who
were obviously watching bond prices struggle to come off their 3-week lows. The
euro also fell against the yen on Russia’s announcement. This week holds some
key economic announcements from the U.S., most notably core consumer prices,
leading indicators and the Philly Fed report.
Crude oil futures rose 2% to close at $59.74 a barrel today,
on fears that OPEC members will agree to cut worldwide production to curb the
falling price of oil. OPEC will meet on October 19 to discuss the possible
cuts, which could have a profound effect on prices. Crude has fallen over
20% since recording record highs in July, in the midst of a war in the Middle
East and North Korea’s missile tests. Natural gas rose nearly 13% as the
first cold snap of the season envelops the Northeastern U.S., and weather
forecasts call for more cold weather.
Gold futures rose 0.8% to close at $597.30 an ounce, as
safe-haven futures demand increased after the U.N. Security Council unanimously
voted to punish North Korea for testing a nuclear bomb. Gold and oil rose
lock-step today; over the summer, the commodities traded hand-in-hand, as energy
fears sparked safe-haven demand. Copper rose moderately today, as did
silver, in hand with most commodity futures.
Softs traded mixed today. Cocoa fell 0.7% on speculation
that a strike in the Ivory Coast will be short-lived. Coffee fell 2%,
orange juice rose 1.8% and sugar rose over 5%.
Grains traded mixed as well. Corn was up 0.7%, wheat was
up 3.2%, soy fell 0.4% and oats rose 0.6%.
Meats traded mixed, with cattle up 0.6% and porkbellies down
1.4%.
A round of foreign economic reports was released
today.
Check them
here.
John Patrick Lee