Futures markets show inflation worries, here’s why
Rising Import Prices pushed Gold futures to a
9-month high as inflation worries rose today.
The Department of Labor monthly
report on Import
and Export Prices showed a rise in Import Prices for the third consecutive
month. The monthly rise was the largest since March and Import Prices are 7.6%
higher than a year ago. August data does not reflect the impact of hurricane
Katrina but the trend is clearly up and accelerating.
With rising energy costs, CPI, PPI and now import prices,
traders are becoming even more concerned about inflation. Gold is the natural
place to turn and is often used as a hedge against inflation.
The energy complex closed lower despite little improvement in
the latest statistics released by the US Minerals Management Service (report).
Production lost in the Gulf of Mexico has remained around 60% for oil and 40%
for gas for much of this week. Fears are rising that current production in the
region may be running at or near capacity. Crude Oil -0.60%, Natural
Gas -0.74%, Heating Oil -1.53% and Harbor Unleaded Gas -3.71%.
The rise in energy prices contained in the import prices
report also pushed longer dated US treasuries higher and the US dollar lower on
concerns the economy will slow down. 10yr T-Note +0.06%, 5yr T-Note +0.03% and
2yr T-Note -0.02%.
Silver +0.53% was the leader among the metals, followed
by Gold +0.51%, Platinum +0.33% and Palladium +0.03%.
Copper -0.90% was the only faller.
The grains were mixed, Wheat +0.70% and Corn
+0.12% closed higher, Soybeans -1.58% closed lower. The softs were mixed,
Cocoa -2.17%, Coffee -0.52% and Cotton -0.12% closed
negative, while Frozen Orange Juice +1.99%, Sugar +0.88% and
Lumber +0.31 closed positive.
The whole livestock group closed higher, led by Lean Hogs
+3.19%, Live Cattle +1.65%, Pork Bellies +1.23% and Feeder
Cattle +0.91%.
Economic News
Import and Export Prices:
Import Prices, M/M Change – Actual 1.3% Consensus 1.5%
Export Prices, M/M Change – Actual -0.1% Consensus N/A
Ashton Dorkins