Bonds Inch Higher on Economic Worries

U.S. 10-year Treasury bonds extended their rally past yearly highs today,
pushing higher on general concern that the U.S. economy is set for an economic
slowdown. Bonds have been rising steadily since the beginning of June, when the
subprime mortgage crisis began to unfold, and traders began to take notice. In
the subsequent credit meltdown and equity shakeup, bonds rocketed higher, and
are now trading at 18-month highs. Bonds typically rise on economic weakness and
fall on strength, so most investors and traders seem to be bracing defensively
for the worst.

The dollar sank against the euro today to monthly, on continued losses
stemming from Friday’s jobs report, which showed the first loss in jobs in 4
years for the U.S. The dollar was near flat against the yen, but most of the
focus revolved around the dollar/euro pair. The dollar plummeted on Friday on
the release of the negative jobs report, and traders are now betting there is a
100% chance the Fed will cut rates during the next scheduled meeting, next week.
The dollar fell against the Canadian dollar today, but gained on the British
pound slightly.

Crude oil was flat today, recovering some losses from earlier in the session.
Crude fell over 10% from the beginning of the August to the middle, only to
nearly erase those losses over the next two weeks. Right now, crude is trading
near pre-selloff prices. Natural gas futures rose 6% today after a pipeline in
Mexico was bombed.

Gold futures kept rising today, extending Friday’s rally. Gold has been
moving up on dollar weakness, as traders sell the dollar in favor of gold
safety. Gold normally moves inversely to the dollar and with oil, and it was
dollar weakness that kept gold up today. Copper futures were basically

Grains were mixed. Corn futures fell about 0.5%, and soybeans gained 1.5%.

Stocks closed mixed on Monday, following Friday’s heavy selloff due to
poor employment data. A choppy session saw a positive start erased, after
comments from the Fed, but the selling pressure waned leaving the Dow up
slightly, while the S&P 500 and NASDAQ posted minor losses. Click

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No major news to report for the U.S.