Dollar Mixed, Bonds Up on Final Trading Day

U.S. 10-year Treasury bond prices rallied towards recent 3-year record highs,
despite positive numbers from the U.S. Bonds recently hit yearly highs on
general negative economic sentiment towards the U.S. Traders are bearish on the
U.S. economy right now due to a weak housing market and a still-unraveling
credit and liquidity crisis. Bonds typically rise on negative economic news and
fall on positive sentiment, so it’s clear that traders have positioned
themselves defensively heading into the new year.

The yen rallied versus the euro and the dollar today, and the dollar also
surged against the euro. The dollar has been struggling versus the euro in the
past months on general negative sentiment, also stemming from the credit/housing
problems. The dollar is trade just off all-time record lows against the euro,
and many traders are looking for more dollar losses heading into 2008.

Crude oil futures were basically flat today. Oil is trading just off all-time
record highs below $100. Crude trading was very light in volume today, on the
last trading day of 2007. Natural gas futures rose 1.5%.

Gold futures fell about 0.7% today on dollar strength. Gold normally trades
inversely to the dollar and with crude, and today traders focused on dollar
strength. Traders sold gold in favor of a rising dollar. Copper futures fell
about 1%.

Grains were higher today. Soybeans rose 0.7%, and corn rallied 1%.

Economic News

U.S. existing home sales rose unexpectedly
in November.