Bonds, Oil on the Rise

U.S. 10-year Treasury bond prices hit new yearly highs today, on negative
economic report out today. The long-term government security rose on underlying
concerns for the U.S. economy, which has been troubled by credit and housing
problems in the past few months. Bonds typically rise on economic weakness and
fall on strength, so it’s clear that traders are bracing themselves defensively
in the short-term.

The major currencies were mixed today. The euro rose versus the dollar and
the yen, on underlying strength in the European economy. The dollar fell on the
euro, but was actually up against the Japanese yen. The yen could be considered
the biggest loser of the day, as perceived equity strength led to yen buying,
with traders covering borrowed yen positions. The dollar fell against the
Canadian dollar and the British pound.

Crude oil futures rose over 2% today. Crude hit new record highs just off
$100 a barrel last week, but have fallen back this week to trade in the
mid-90’s. The $100 mark is a huge level of psychological resistance, and a break
of that level would be a major milestone. Natural gas futures rose over 4%
today.

Gold futures fell slightly, despite rising crude price and a falling dollar.
Gold normally trades inversely to the dollar and with crude oil, but gold went
its own way today. Traders sold gold in the face of dollar weakness and rising
energy prices, which conflicts with normal trading patterns. Copper futures rose
over 2%.

Grains were mixed. Soybeans were down fractionally, while corn gained over
1%.


Economic News

U.S. industrial production fell more than
expected in October.