Bonds Rest on Light News

U.S. 10-year Treasury bond prices fell slightly today, on a day with no major
economic news coming out of the U.S. Bonds rose last week, as the dollar fell,
on widespread concern that the U.S. subprime mortgage fallout will affect the
entire U.S. economy and growth. Housing sector problems are also weighing on
investors, and represents the other major problem that most traders see in the
current U.S. economic equation.

The majors were basically flat against each other today, with the dollar
gaining on the euro after amassing moderate losses last week. The U.S. dollar
has been falling hard lately against both the euro and the yen, as traders bet
that the subprime mortgage weakness will spread to other areas of the economy,
ultimately affecting U.S. growth and production. No major economic reports are
due out today, also helping to contribute to the lack of volatility. The dollar
fell against the Canadian dollar, and also dropped against the British pound

Crude oil prices fell around 1.5% today, after it was reported that OPEC was
concerned that elevated prices could negatively affect the world economy. OPEC
hinted that the organization might increase production limits, to flood the
market with supply and drive prices lower. OPEC has tried to influence prices in
the past through statements and output reductions, and those efforts have seen
mixed results. Natural gas futures fell over 6% to 7-month lows on a supply

Gold futures fell about 0.5% today, as the dollar managed to gain on the
euro. Gold normally trades inversely to the dollar and with oil; today’s gold
trading was dominated by dollar strength, as traders bought the dollar over

Grains fell today. Soybeans fell nearly 4% and corn dropped about 2.6%.

Stocks moved sharply higher to start off
the week after new merger and acquisition activity. Today’s M&A deals took place
in a wide variety of market sectors. These included oil drilling, equipment
rental, and technology. Better-than-expected earnings from Merck and
Schering-Plough also helped the indices move higher.

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No major economic news to report for the U.S.

John Lee

Associate Editor

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