Crude Oil Falls The Most In 3-Weeks

U.S. 10-year Treasury bonds were flat today, giving back early
gains to break even. An economic report released today showed that
personal spending rose last month, as did incomes. Despite a somewhat
sunny economic report, Fed President Jeffrey Lacker from the Richmond Bank today
said that the inflation outlook is “discomforting;” Lacker has been a dissenting
voice the last 3 meetings, favoring a rate hike each time. Bond prices
shot up in June, when the Fed initiated a pause on the rate hikes, but began to
fall after hawkish minutes were released from the September meeting.
Following the October meeting, when rates were held again, bond prices shot back
up, on a flow of negative economic data coming from the U.S.

The dollar ended its slide against the euro and yen today, on
data that shows personal income and spending increased last month. The
dollar fell dramatically against the euro and yen last week, after the Fed
continued the rate pause and more economic data pointed towards a slowing U.S.
economy. The currency market has been dominated by interest rate and
inflationary data, with economic growth remaining the focus point for most
global investors.

Crude oil futures fell 3.8% to $58.43, the largest drop in 3
weeks on above-average inventories and warm weather forecasts. Crude has
fallen steadily from its July record highs, notched during a tense war in the
Middle East and North Korea missile tests. OPEC has warned of impending
global output cuts, which would curb losses on the falling price of oil.
However, the individual members of OPEC have had little success in finding a
unified front, and the proposed Nov 1 start for the reduction does not look like
it will be reached. Natural gas futures fell 5.3% on warm weather
forecasts, which reduce demand in the energy contract.

Gold futures rose 1.2% as jewelers purchased large quantities
of the metal ahead of the holiday season. Gold demand usually increases
during the last part of the year, due to the year-end holiday seasons which rely
on the metal for gifts and jewelry. Gold is down nearly 20$ from its May
highs. Copper fell nearly 2% during today’s session.

Softs traded mixed today. Cocoa rose 1%, coffee was
flat, orange juice rose 0.4% on supply fears, and sugar fell nearly 3%.

Grains traded mixed today. Corn fell nearly 1%, wheat
fell 1.4%, soy rose 0.6%, and oats rose 0.9%.

Meats rose across the board, with cattle up fractionally and
porkbellies up 1.7%.


Economic
News

Personal Income Shows Notable Increase, Personal Spending
Edges Higher (full
story
).

John Patrick Lee