Bonds Higher on More Bad News
U.S. 10-year Treasury bond prices rose today, on anticipation of weakness in
tomorrow’s key initial claims report. Traders are betting that the report will
show further weakness in the jobs market, which is being exacerbated by
underlying housing and economic weakness. Traders, on the whole, have taken a
defensive position in the face of a number of key negative indicators, like a
struggling housing market. Many traders are viewing recent market action as the
beginning of a recession cycle, and bonds are also indicating those worries,
hitting yearly highs last month.
The dollar slumped against the euro and the yen today, after disappointing
jobs numbers and falling factory orders. The dollar put in a mediocre rally
today, but fell out of bed this morning on the negative economic news. Traders
increased bets that the Fed would cut rates again before the year is out,
indicating that many are watching for more dollar weakness to come. The yen was
up slightly versus the euro, but the major action surrounded the dollar.
Crude oil gained just less than 2% today, after an inventory report yesterday
showed an unexpected decline in gasoline inventories. Crude is trading near
record highs, above the key $80 a barrel benchmark. Traders are concerned that
Q4 demand will outpace supply, keeping crude prices near their record levels.
Natural gas futures rose about 1.7%.
Gold futures rose a little less than 1% today, on dollar weakness. Gold
normally trades inversely to the dollar and with crude oil, and today it was
dollar weakness that led to gold buying. Traders bought gold as a safe haven
from widespread dollar weakness. Copper futures were down about 0.6% today as
Grains were mixed today. Soybeans rose about 0.4%, while corn fell just over
Stocks closed fractionally higher on Thursday, ahead of tomorrow’s monthly
employment report. In Europe, the ECB and the BoE left interest rates unchanged
at 4% and 5.75% respectively. Click
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Stock Market Recap.