Bonds Up on Subprime Speculations
Continuing mergers and takeovers pushed the
Dow to a new record close of 13,950.
Read the rest of the Stock Market Recap
here.
U.S. 10-year Treasury bonds shot higher today, on speculation that subprime
mortgage problems will spread to other areas of the economy and impede growth.
The price of the 10-year bond has risen for 2 straight days on general
speculation that the U.S. economy is in trouble. Bonds hit 11-month lows in June
on overall positive sentiment, but negative housing reports and other
questionable reports have led to a rise in bond prices. Bonds usually rise on
weakness and fall on strength, so it’s clear that traders are taking recent
reports and speculations as bad signs for the U.S. economy.
The dollar was basically flat today against the euro and fell slightly
against the yen, ahead of a few key economic reports to be released later this
week. Producer prices, consumer prices and housing starts are all out this week,
which should provide currency traders with plenty of data to jumpstart
volatility. The euro was down fractionally against the yen. The dollar sank
against the Canadian dollar, and was down slightly against the British pound.
Crude oil was slightly lower, but still trading close to $74 a barrel. Oil
has been on the rise since the end of May, on a string of production worries and
general speculation that summer demand will outpace supplies. Crude oil normally
rises during the summer on increased energy demand, and this summer has been no
different so far. A pipeline malfunction in the North Sea led to higher prices
on Friday, and with little news to trade on, prices are holding steady. Natural
gas futures fell 4.4% on mild weather forecasts.
Gold futures fell fractionally today, on speculation that the dollar could
rally against the euro soon. Gold trades inversely to the dollar and with oil;
today traders sold gold on speculations of dollar strength. Copper futures fell
1.4% on comfortable supply levels.
Grains fell today. Soybeans dropped 5.4% and corn fell about 5.6%.
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John Lee
Associate Editor