Bonds Up Fractionally Despite Data

U.S. 10-year Treasury bond prices jumped today, but fell through the day to
close only fractionally higher. After a weak earnings report from a major
homebuilder, and more negative housing numbers, traders were betting on future
U.S. economic weakness by buying long-term bond safety. Bonds typically rise on
economic weakness and fall on strength, so traders took today’s housing news as
more negative weight for the economy and markets.

The dollar continued to free-fall today, moving to new record lows versus the
euro, and also dropping against the yen. A private report showed that consumer
confidence fell more than analysts were expecting this month, further escalating
fears that the U.S. economy is headed towards a major slow-down. The dollar has
been falling across the board since the Fed cut 2 key interest rates last week,
and it looks as though it will take a major piece of news or market changing
event to alter the dollar’s downward spiral. The dollar was down on the Canadian
dollar but up versus the British pound.

Crude oil futures fell a little less than 2% today, on comments from Saudi
Arabia’s oil minister. The official said that the energy “market is in turmoil,”
hinting that prices were well overbought. Crude also fell today as a major storm
passed through the Gulf of Mexico, and oil rigs resumed full production. Crude
oil has been pushing into new highs for weeks now, after falling more than 10%
in less than two weeks in the beginning of August. Natural gas futures were
slightly lower on balmy storm predictions.

Gold futures were down slightly, in line with falling crude prices. Gold
normally trades inversely to the dollar and with oil; today, traders focused on
falling oil prices rather than a weakening dollar. Copper futures were also down

Grains were lower today. Soybeans fell about 0.6%, and corn dropped 0.5%.

The major indexes opened lower, but rallied through the day to close
mixed. After homebuilder Lennar posted record losses for last quarter,
traders sold stocks early in the morning before the indexes managed a reversal.
Poor results from the homebuilder, in addition to a weaker than expected housing
report, helped to weigh on investor sentiment across the board. Click

to read the rest of today’s

Stock Market Recap

Economic News

U.S. existing home sales fell to 5-year
low in August.