Bonds Sink on Employment Expectations
U.S. 10-year Treasury bond prices sank off recent 3-year record highs today,
as investors digest President Bush’s plan to freeze interest rates on some
subprime mortgages. Tomorrow, traders are expecting the U.S. to announce a
significant increase in non-farm payrolls, which also helped to push bond prices
lower. Bonds typically rise on economic weakness and fall on strength, meaning
that traders have braced themselves for negative conditions in the coming
The yen fell today across the board, as traders around the world re-entered
the carry trade on perceived equity strength. US stocks rallied today, which led
to the yen fall. 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. The
dollar down fractionally on the euro.
Crude oil futures rallied today over 2%, mostly on demand worries after
today’s natural gas report showed an unexpected decrease in supplies. Although
crude is different than natural gas, a significant decline in natural gas led
traders to worry that the same could be on the way for crude supplies. Natural
gas rallied under 2% on the report.
Gold futures rallied today just over 0.5%, in line with rising crude prices.
Gold normally trades inversely to the dollar and with crude oil. Today, gold
traders focused on rising energy prices, and bought gold as a safety hedge.
Copper futures rose about 0.5%.
Grains were mixed today. Corn rose fractionally, and soybeans were flat for
the second straight day.
Stocks posted strong gains for the second consecutive day after the Bush
administration unveiled plan to help homeowners keep hold of their properties.
Traders attention now shifts to Friday’s employment report, with economists
expecting an increase of 70,000 jobs. Click
here for the rest of today’s
Stock Market Recap.