Fed Sounds Wake Up Call

The highlight of the day was the
release of the November Fed Minutes.
Concerns about inflation were
the main reason cited for the last rate rise. However, what caught traders
attention was the news that some members cautioned against going too far with
the tightening policy and that the language regarding the policy outlook will
have to be changed before long.

Go to the
page for help with your nightly trading research.


The Fed minutes sent treasuries higher as comments suggested a
possible slow down in the pace a interest rate rises. Treasuries rallied across
the yield curve, led by the short-end. The yield on the 2-year T-Note fell to
its lowest level in a month.

Fed Funds futures dramatically reduced the likelihood of rate
rises next year.


The US Dollar Index sold off sharply after the minutes were
released. The Dollar had its biggest decline in 3-weeks versus the Euro.


Energy prices rallied for the second consecutive day, led by
Crude Oil. With colder weather hitting the northeast US and below average
temperatures forecast over the coming days, Heating Oil and Natural Gas moved

Goldman Sachs reduced their forecasts for Crude Oil, Heating
Oil and Natural Gas, citing unusually warm weather this fall.


Gold and Silver closed higher, boosted by the Fed comments on
inflation. Copper sold off sharply, losing 3.32%, after the LME said the “rumor”
circulating that China must deliver 200,000 tons of Copper by December 21 is


None of the major grain contracts closed +/- 1% in quiet
pre-holiday trading.


The USDA announced a 25% drop in the amount of Frozen Orange
Juice from a year ago. Coffee closed modestly lower despite posting early gains.
Cocoa traced out the opposite pattern with late day buying pushing it into
positive territory. Cotton soared in early trading before trading in a very
narrow range for the rest of the session.


Lean Hogs recovered some of yesterday’s heavy selling as
traders flattened out positions ahead of the holiday.

Economic News

Fed Minutes:

Several Aspects Of Statement Language Would Have To Change Before Long

Some Members Cautioned That Risks Of Going Too Far With Tightening Process Could
Eventually Emerge



Retail Sales Climb 0.1% During First 3 Weeks Nov.

Click Here
for more Economic News, including in-depth analysis.

Ashton Dorkins


Be sure to vote for
TradingMarkets in the 13th Annual
Stocks & Commodities
2006 Readers’ Choice Awards