Ceasefire Sends Oil Falling
U.S. 10-year yields rose today as investors wagered that the
Fed will have to raise rates in the next meeting in September. The
consumer price index and producer price index are both slated to be released
this week, and most investors believe that the numbers will point to growing
inflation. Bond prices dropped on expectations that inflation will hurt a
slowing U.S. economy. The 10-year rate is currently at 5% and the five
year is at 4.94%.
The dollar and the euro rallied hard against the Japanese yen
today. The ECB released numbers today that showed the European economy
grew at its fastest pace in six years during the second quarter. Against
the dollar, the euro was basically unchanged. The dollar rallied against
the yen today ahead of key economic reports to be released later this week,
which could show rising inflation, necessitating a rate hike in September.
The ECB and BoJ are both expected to raise rates before the year is out, adding
pressure to a somewhat bearish dollar.
Crude oil futures fell 1.6% to close at $73.20 on the
ceasefire in the Middle East. Crude has been reacting directly to the
fighting, and to the possibility of losing Iran’s supply of crude. A
ceasefire fed notions that there are no immediate supply issues, and that crude
is somewhat overbought. In other supply issues, BP stated that the Alaskan
pipeline will be kept open, although pared down to an output of about 200,000
barrels a day. About 8% of the oil the U.S. consumes comes from the
Alaskan pipeline, and the discovery of corrosion led to a spike in crude last
week. Natural gas, however, rose 0.75%.
With oil, gold fell 0.8% to close at $630.40 an ounce.
Silver and copper both rose, with silver up 2.3% and copper rose 1.5%.
Aluminum dropped 1.3%.
Softs fell across the board in today’s trading. Cocoa
dropped 2.5%, coffee fell 3.4%, orange juice fell fractionally, and sugar
plummeted 6.4%.
Grains traded mixed to lower today. Corn was down 1.2%,
wheat traded with little change, soy was down 0.2% and oats fell 1.7%.
Meats traded mixed, with cattle up 1% and potbellied pigs up
nearly 2%.
A slew of foreign economic reports were released
today.
Check them
here.
John Patrick Lee