Bonds, Oil Stall To Close The Week
U.S. 10-year Treasury bond yields remained basically the same,
after a Fed president said that lower oil prices could actually boost consumer
spending and support economic growth. Yields have declined steadily over
the summer, as the Fed stopped raising rates on a slowing U.S. economy.
The Fed meets to discuss the prospects of a rate hike next week; interest rate
futures show about an 80% chance that the Fed is done raising rates for the
year. However, economic reports this week showed that the economy is not
slowing as quickly as once feared, and the Fed president’s comments today also
support this.
The yen fell against the dollar, moving back near 7-week lows
against the currency. The yen fell hard on speculation that the yen will
not be brought up at tomorrow’s Group of Seven meeting, which would leave the
currency to flounder for the time being. The euro fell to 1-month lows
against the dollar today, on comments from the French Finance Minister that
inflation is in check, which would mean the ECB would not have to raise rates.
The euro has performed strongly over the summer as the ECB has maintained a
hawkish view on raising rates, keeping the possibility of raising rates twice
before the year is out.
Crude oil rose fractionally today during trading, after two
weeks of straight declining. With oil inventories at comfortable levels
and the global political situation cooling down for the moment, demand fears
have eased considerably. Natural gas rose nearly 2% after reaching 2-year
lows this week.
Metals fell today across the board. Gold futures were
down 0.5% on continued demand fears, silver fell 0.7%, copper fell nearly 2% and
aluminum fell 0.4%.
Softs mostly fell today. Cocoa fell 1%, coffee fell 1.3%
and orange juice fell 0.6%. Sugar stood out today, up 2.3%.
Grains traded mostly higher today. Corn was up nearly
2%, wheat was up 0.5%, soy rose 0.8% and oats rose 0.4%.
Meats traded mixed with cattle up 0.5% and porkbellies down
fractionally.
Industrial Production Falls Unexpectedly In August (full
story).
John Patrick Lee