Bonds Rise on Durable Goods

U.S. 10-year Treasury bond prices rose today, but gave up some of those gains
as the day went on. A U.S. durable goods orders report came out surprisingly
weak today, which helped to push bond prices higher. Bonds usually rise on
economic weakness and fall on strength. After hitting 11-month lows about 3
weeks ago, bonds have been climbing higher on negative housing reports and other
inflationary data. The final GDP numbers from Q1 are due out tomorrow, so that
should provide bond traders with some data to move the market.

The yen continued its rally today versus the dollar and euro, as traders
scaled back carry trades to lessen risk exposure. Traders borrow the yen to
invest in more profitable currencies in the so-called carry trade. Today, the
yen jumped as traders bought back the yen to cover positions in riskier areas.
Traders around the world are concerned about the mortgage fallout in the U.S.
and high global interest rates. The euro fell slightly on the dollar, despite
a weak inflationary report out of the U.S. The dollar rose slightly against the Canadian dollar.

Crude oil gained about 1.8% today, after an Energy Department report showed
an unexpected decline in gasoline last week. Oil has been pushing towards the
$70 mark for a few weeks now, and some major Middle Eastern or Nigerian news
could push price over that watermark. Summer demand in the U.S. means higher
prices, and usually declining reserves, so traders are sensitive to any
supply-related issues.

Gold traded with fractional change today. Gold fell yesterday on rising
global interest rates, as traders turn to bond yields as a safety alternative to
the precious metal. Gold usually trades inversely to the dollar and with oil,
but lately, interest rates have been factoring into the equation. Copper futures
rose 1% today on strike threats from South America.

Grains traded lower today. Soybeans fell 0.4%, wheat dropped 0.2% and corn
plummeted 3.3%.


Durable goods orders fell 2.8%, more than

John Lee

Associate Editor

Each day, TradingMarkets will be giving
free open access to one of our stock indicator lists. The stocks on these lists
all have historically backed data (covering over 7 million trades) to quantify
their trading edge.
Click here for today’s free list of

5+ Consecutive Lower Lows.