Bonds Slip Ahead of Fed Decision
U.S. 10-year Treasury bond prices fell today, as investor confidence was
boosted by a rise in U.S. equity markets, and sentiments that the housing
slowdown will not have a serious effect on the overall U.S. economy. Bonds
spiked two weeks ago on widespread concern that the U.S. subprime mortgage
fallout and housing problems will create a major disruption in U.S. economic
growth. The Fed announces their rate decision tomorrow, so bonds could
potentially move big on any surprise move.
The U.S. dollar fell against the euro today, on fears that the U.S. Fed is
set to cut rates tomorrow to handle with the escalating subprime mortgage
fallout. The risky loan market has taken a huge hit over the past few months,
and those losses are beginning to spread to other areas of the market. Comments
from financial giant Bear Stearns last week led to a major selloff and dollar
weakness. The yen fell against the euro, and the dollar was up slightly against
the yen. The dollar cell on the Canadian dollar, and also fell against the
British pound.
Crude oil prices fell over 4% today, on concern that the U.S. mortgage
problems will effect economic growth, and lessen oil demand. Crude prices fell
the most in 7 months today, on widespread negative economic sentiment. Crude
prices usually rise during the summer on higher demand; crude rose through the
early months of summer, but has fallen over 8% since the beginning of August.
Natural gas futures rose nearly 2% on summer heat and the coming hurricane
threat.
Gold futures fell slightly today, on speculation that the dollar slide has
gone too far already. Traders bet that dollar could be on the rise soon, which
led to gold selling. Gold usually moves with oil and against the dollar; today’s
gold action was dominated by speculations of dollar strength. Copper fell 0.2%
on housing growth concerns.
Grains fell today. Soybeans dropped 1.3% and corn fell about 0.4%.
Stocks rallied back after last Friday’s major selloff despite continuing
credit concerns and uncertainty over tomorrow’s Federal Reserve meeting. The Dow
and S&P 500 added over 2% and the Nasdaq rose 1.4%. Click
here to read the rest of today’s Stock Market Recap.
Economic News |
|
|
John Lee
Associate Editor
Join TradingMarkets
Director of Education, Steve Primo, as he teaches a number of quantitative
strategies that can potentially give you an edge in your trading.
Sign up now for one of our free training classes and start learning how to
become a better trader.