Bonds Rally on Housing Weakness
U.S. 10-year Treasury bonds shot higher today, after a government report was
released that shows new home sales fell more than expected last month. The
housing market remains a sharp thorn in the side of the U.S. economy, and many
investors are worried that housing market weakness will derail other weak areas
as well. Traders have been pushing bonds higher through the summer, on
expectations that housing weakness will spread.
The euro rose across the
board, hitting new highs over the dollar before giving up some gains. The dollar
sank after a report showed that new home sales fell in August more than
forecast, helping to increase expectations of a full-on recession in the U.S.
Traders have been worried for months that housing weakness could lead to a
full-scale economic meltdown, and with the double rate-cut last week and the
underlying credit crisis, many are seeing their worries come to fruition. The
yen has also been trading inversely to the markets, on the recurring carry-trade
dynamic.
Crude oil futures rallied to new highs today, pushing close to $83 a barrel,
on worries that Q4 demand will outpace supply. Yesterday a government report
showed that a key reserves benchmark fell to 21-month lows, prompting more
demand fears. Oil fell about 13% in August before rallying to new highs. Natural
gas fell today, down nearly 2%.
Gold futures rose 0.7% to trade near decades-old highs, as the dollar fell to
new lows versus the euro today. Gold normally trades inversely to the dollar and
with crude oil, which is exactly what happened today. Traders bought gold for
safety from rising oil and a falling dollar. Copper futures rose about 1%.
Grains were higher today. Soybeans rose nearly 2%, and corn gained about 3%.
Stocks rose on Thursday, after a choppy morning session. The trend of
disappointing data relating to the slumping housing market continued today, with
single-family home sales falling 8.3% last month. Click
here to read the rest of today’s
Stock Market Recap.
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