Bonds Plummet on Jobs Report

U.S. 10-year Treasury fell today, after a better than expected jobs report was released.
Traders dropped bets that the Fed would cut rates again before the year was out on the positive news. The equity
markets also responded well to the jobs numbers, and on the whole, positive U.S. sentiment guided
today’s trading. Bonds rose steadily through the summer to yearly highs before dropping on
anticipation of the rate hike.

The dollar gave up some gains versus the euro to close near-flat today, despite a positive jobs report out of the U.S.
The yen also slumped across the board, on continued speculation that traders will keep borrowing
yen cheaply, and investing in more profitable assets. The two major currency focus points for the last few months
have been the yen carry trade dynamic and dollar weakness. Across the board, traders are looking for further weakness
from both currencies.

Crude oil fell today, after a strong rally yesterday. Prices plummeted at the beginning of the day, but underlying
strength helped to push prices back to near-flat terroritory. Crude has been gaining fairly steadily over the past few weeks
on fears that U.S. demand in Q4 will far outpace supply. Earlier in the summer, crude fell over 10% on slow-growth worries, but the rate cut and
equity rebound have helped to propel crude into new record highs.

Gold futures rose about 0.5%, on perceived underlying dollar weakness. Gold normally trades inversely to the dollar and with oil. Today, gold rose
as the dollar gave up moderate gains versus the euro. Despite a positive jobs report, traders are still looking at gold as
a safety to protect against dollar weakness. So despite a flat day for the dollar, gold rose on the fact that
the dollar couldn’t hold onto gains, even backed by a positive jobs report.

Grains were mixed today. Soybeans fell about -1.6%, and corn was near flat.

Economic News

U.S. employment growth increased in September, and revised August numbers are unexpectedly positive.