Bonds Rise on NY Data

U.S. 10-year Treasury bonds rose for the first
time today in a week, after a New York manufacturing report showed that growth
slowed more than forecast this month. Bonds have been sliding fairly
steadily since the beginning of June on a string of positive economic reports
from the U.S. Growth and inflation usually equate to lower prices, and
slow growth means high bond prices. Bonds initially shot higher last
June when the Fed initiated a rate-pause on U.S. growth weakness, but recent
reports have begun to show signs of strength. Housing, jobs, confidence
and manufacturing all seem to pushing hard against their once-negative trends.

The yen fell to its lowest levels in over a year
against the dollar, and fell moderately against the euro, after a news report
was released that Japan will probably not lift rates later this week. The
international currency market has favored currencies backed by hot, growing
economies, which has put the yen in a tough spot, considering Japan has been
unable to consistently produce any positive-growth, inflationary numbers.
A decision to hold by the BoJ would represent a lack of faith in the Japanese
economy, which could bring even more trouble for the yen. The euro fell
slightly against the dollar.

Crude oil fell over 3$ to close near $51 a barrel
today, after Saudi Arabia’s oil minister rejected OPEC’s calls for more output
reductions. OPEC has ordered a cut of nearly 2 million barrels a day to
curb losses stemming from the falling price of crude, and has threatened more
cuts if prices do not stabilize. Crude has been falling on large supplies
and warm weather across the U.S. Without support for the cuts from the
Saudis, OPEC will have a hard time getting more reductions passed. Natural
gas fell nearly 1% as investors speculated that inventories can easily handle
the cold weather which is just not reaching the northern U.S.

Gold fell fractionally today, as declining energy
costs lessen the metal’s desirability as a hedge against rising oil prices.
Gold usually moves with oil and inversely to the dollar, but it was oil action
that dominated gold trading today. Copper futures fell 1% as investors
speculate that large inventories will keep any demand fears at bay.

Grains adjusted themselves after a massive run-up
on Friday across the board. Wheat fell over 3% after surging higher on
Friday and soybeans fell just over 1%. Corn rose just over 1%.

Economic News

Manufacturing orders in New York fell more than
expected this month.

John Lee

Start your trading day with

Futures Trend Matrix
designed to help you define the short-, intermediate-, and long-term trend for
more than 40 active futures contracts.