Bonds Rally to Near Yearly Highs
U.S. 10-year Treasury bond prices rose to within a fraction of the yearly
record, set in early September. Bond prices have jumped in the last 2 weeks, on
underlying housing and economic concerns, as well as a recent downturn in U.S.
equities. Bonds typically rise on economic weakness and fall on strength, so
it’s clear that traders have assumed a defensive position heading into the end
of the year.
The yen surged across the board today, as global equity weakness led to a
reversal of the carry trade. The carry trade has been the main market mover for
the Japanese currency in the past months, as traders enter and exit yen
positions based on perceived market risk. The dollar was near flat on the euro,
as most of the action surrounded the yen. The dollar rose against the Canadian dollar and the British
After 3 days of significant selling pressure, crude oil futures bounced
today, rising about 1.8%. Today, the U.S. announced that crude reserves fell
more than expected last week, heightening worries that Q4 demand will outpace
supply in the U.S. Crude recently hit all-time record highs above $90 a barrel
in overnight trading, so a correction was somewhat expected by most traders.
Natural gas futures rose about 3.6%.
Gold futures rose fractionally today. Normally gold trades inversely to the
dollar and with crude oil, but neither seemed to effect gold prices. Traders
sold the dollar versus the euro, and crude rose, but gold remained fairly
steady. Copper futures fell about 1.7% today.
Grains were lower today. Soybeans fell 0.7%, while corn dropped 1.2%.