Commodities Fall, Yields Remains At 1-Month Low
Ten-year bond yields remained mostly unchanged today, hovering
near 1-month lows. The industrial production numbers led investors to bet
that the Fed will raise rates again in August, which prompted a short-lived
rally for the yields early this morning. Short term yields rose today, as
investors exited positions made at the end of last week, when tensions between
Israel and its neighbors began to exacerbate. Analysts believe that a
relatively quiet weekend allowed investors a breath of air, as they took profits
on the short-term bond plays which were sparked by the violence last week.
The U.S. Dollar moved to a 3-month high against the Japanese
Yen, and also staged its biggest one-day move in over a month against the Euro.Â
As the violence escalates in the Middle East, investors are turning to the
dollar as a safe-haven, fueling Dollar bullishness across the globe. With
Fed Chairman Bernanke to speak later in this week, investors are also looking to
him for clues that the Fed will raise rates again in August, which would signal
a growing U.S. economy.
The metals fell across the board as investors thought the
continued fighting in the Middle East will hurt economic growth and demand for
raw materials. Gold fell over 3.5% to close at $644 an ounce, down over
$20 for the day. Copper dropped 4% today, the biggest one day loss in over
a month. Aluminum and zinc also fell on the globalized fear of damage to
the commodities markets.
Crude oil futures also fell today, after Israel reportedly
said that the attacks could be coming to an end soon. There was no
confirmation of the statement, as most officials are banned from speaking to the
press about such military matters. Crude oil closed down 1.6% at $75.80 a
barrel. Despite a burning hot summer across North America, Natural Gas
suffered its biggest loss this year on news that nat gas inventories are
plentiful. Natural Gas for August delivery fell nearly 9%, to close at
$5.79 per BTU.
The grains fell across the board as summer heat continues to
beat on investor sentiment. Soybeans traded down 1.3% and corn traded down
2.5%.
The softs traded lower across the boarder, with cocoa down
about 1% and sugar down slightly.
Feeder cattle traded lower today, despite intense heat across
the US which could damage the cattle herds.
Industrial Production Growth Exceeds Estimates In June (full
story).
Conditions For New York Manufacturers Improve At Slower Than
Expected Pace (full
story).
John Patrick Lee
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