Bonds Higher Despite Positive Data

U.S. 10-year Treasury bond prices rose today, hitting new yearly records
before falling back slightly. Despite a round of relatively positive economic
reports from the U.S., deep underlying negative sentiment helped to push bond
prices higher. Bond prices typically rise on economic weakness, so it was clear
that traders are taking a very defensive position relative to bonds, heading
into the end of the year. With bonds at yearly highs, and rate cuts in the news,
many traders are asking whether additional cuts are possible before the year’s

The U.S. dollar fell to new lows versus the euro, and also dropped against
the yen. The euro also rose against the yen, while the dollar was slightly
higher versus the Japanese currency. The dollar has been under major pressure
lately, and Wednesday’s double rate cut helped furthered opinions that the
dollar has more room to fall. Despite some positive data out of the U.S. today,
the pervasive negative sentiment helped to drag the dollar lower. The dollar
plummeted on the Canadian dollar, and also fell slightly versus the British

Crude oil futures continued to gain today, inching towards record highs set
only yesterday. Crude has been rocketing higher since a relatively mild pullback
in August, pushing oil to new records almost daily. Some traders are looking to
OPEC to announce an increase in global supplies, but the organization has yet to
come forward with soothing news. Natural gas futures fell over 2% on comfortable
supply levels.

Gold futures also rose today, pushing higher into $800 territory. Gold
normally trades inversely to the dollar and with gold, which is exactly what
happened today. Traders bought gold to hedge against rising oil prices, and also
as an alternative to a dollar investment. Copper futures fell about 0.7%.

Grains were up today. Soybeans rose nearly 1%, while corn jumped 2.3%.

Economic News

U.S. added 166k jobs in October, more than