Equities Down, Bonds Up
U.S. 10-year Treasury bond prices rose further today, as traders speculate
that slowing growth will lead to an overall economic slowdown. Shaky equity
markets also contributed to rising bond prices, as traders bought bonds as a
safety from equity risks. Bonds have been rising steadily since the beginning of
July, when the subprime mortgage problems began to spread through the economy.
Bonds typically rise on economic weakness and fall on demand, so traders are
taking a defensive position in this weakening market.
The yen rose today against the dollar and the euro, as global equities remain
on shaky footing. Japanese and European markets managed to stay just in the
green, but U.S. equity weakness on the open has helped to heighten fears that a
global economic slowdown is on the way. The yen gained, as traders covered
positions by buying back previously borrowed yen, in the so-called carry trade.
Lately, the yen has been trading inversely with global equity markets, on the
carry trade dynamic. The euro also fell against the dollar today. In general,
global equity markets have had a large hand in directing currency movements over
the past few weeks.
Crude oil futures fell about 0.7% today, giving up some gains after
yesterday’s rally on falling gasoline reserves. Crude oil has been falling since
the beginning of August on concerns that slowing U.S. growth will equate to
slowing energy demand. Natural gas futures were up slightly.
Gold futures fell about 0.3% as the dollar rallied on the euro. Gold normally
trades inversely to the dollar and with oil, which is exactly what happened
today. Traders sold gold in the face of dollar strength and falling oil prices.
Gold futures have been trading within a fairly tight range since before April of
this year. Copper futures were fractionally changed today.
Grains were mixed. Soybeans gained over 1%, and corn fell slightly.
Stocks closed mixed on Thursday, with the NASDAQ closing fractionally
higher, while the Dow & S&P 500 gave back some of yesterday’s gains. Click
here for the rest of today’s
Stock Market Recap.
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