Consumer Confidence Sends The Dollar On A Ride

U.S. Treasury yields rallied today from one-month lows on an
unexpected increase in consumer confidence in July and a lesser-than expected
decline in home sales.  With these two reports, investors were led to think
that hikes could indeed be coming in August.  The yields were at their
one-month lows on expectations that the Fed would pause the rate hikes in
August, on economic reports which showed a cooling U.S. economy.  However,
with confidence booming and the housing sector declining at a lesser rate,
Bernanke might have to keep hiking rates to keep a lid on inflation.

The Dollar rallied against the euro and the yen today, as a
report today showed an unexpected increase in consumer confidence.  The
report lends weight to bets that the Fed will raise rates in August to keep
inflation in check.  Both the European Central Bank and the Bank of Japan
are both expected to raise rates over the summer, which had been putting
pressure on a supposedly cooling U.S. economy. 

Crude oil futures fell 1.7% to close at $73.75 as the Israeli
conflict in the Middle East stalls its spread to other surrounding countries. 
Traders have been betting over the past two weeks that the conflict would surely
spread, sending oil to a record $78.40 on fears that Iran would cut its supply
of crude oil to the world.  As the fighting continues, the world’s most
powerful countries all seem to agree that an exacerbation of the conflict would
only lead to greater international harm.  Traders are betting now that Iran
will not remove its oil from the market as abruptly as had been feared. 
Natural gas traded lower about 3% after a sharp move up yesterday.

The metals traded mostly higher today, despite a strong rally
in the dollar.  Gold was up .25%, silver was up .25% and aluminum was up
1.4%.

Softs also traded mostly higher today.  Cocoa was
fractionally higher, coffee traded up 1.1% and orange juice was up 1.3% to close
the day.

Grains traded mostly lower.  Corn was down about 2%,
wheat was down 1.8% but oats were up 1.4%.

The meats traded mixed, with feeder cattle trading with little
change and potbellied pigs down 1.3%.


Economic
News

Sales Of Existing Homes Drop In June (full
story
).

Consumer Confidence Sees Unexpected Improvement In July (full
story
).