Bonds Rest After Yesterday’s New Highs

U.S. 10-year Treasury bond prices fell today, after hitting fresh 3-year
highs yesterday on general concern for a U.S. economic slowdown. The housing and
credit market hubbub has sent bond prices soaring in the last few months, as
traders look for safety in the midst of major market uncertainty. Bond prices
tend to rise on economic weakness, and fall on strength, so it’s clear that
traders have positioned themselves defensively heading into the end of the year.

The dollar bounced today, following a tough day yesterday versus both the
euro and the yen. The dollar has been struggling lately, on pervasive housing
and credit worries, which traders are betting could derail U.S. economic growth
in the near future. A number of positive economic reports helped to boost
overall U.S. sentiment today. The yen has been reacting positively to uncertainty in the global equity
markets. In the so-called carry trade, traders have been buying yen on equity
weakness, and selling on strength. The carry trade has been the single most
influential factor for yen movement, and is moving the yen lower today.

Crude oil fell further today, down just over 1%. Crude has been sinking fast,
as traders take profits after driving crude to record highs just off $100 a
barrel. A weakening U.S. economy has helped push prices lower, on general
sentiment that energy demand will fall with economic growth. Natural gas futures
were up about 0.3%.

Gold futures fell over 1% on Wednesday, in line with dollar strength. Gold
normally trades inversely to the dollar and with crude oil, which is exactly
what happened today. Traders sold gold in the face of dollar strength and
falling oil prices. Copper futures rose about 0.5%.

Grains were mixed today. Soybeans were up about 0.7%, while corn was flat.

Stocks surged on Wednesday, boosted by stronger than expected data that
showed the economy is holding up better than previously thought. Click

to read the rest of today’s

Stock Market Recap

Economic News

The ISM service index fell to 54.1 in
November, down from last month.

Worker productivity in the U.S. rose
more than expected last month.