Gold and Oil Slip Further from Highs

U.S. 10-year Treasury bond prices shot to new yearly highs today, rallying on
general negative sentiment surrounding the U.S. economy. Bonds typically rise on
economic weakness, and fall on strength, so it’s clear that traders have
positioned themselves defensively heading into the end of the year. Bonds also
rallied today on an announcement that Barclays would write down nearly $3
billion in securities, and also a warning from Wells Fargo.

The yen rallied today on general global economic concerns, as traders unwound
the carry trade to avoid risk. The dollar was also slightly higher versus the
euro, as traders looked for safety as credit losses continue to be exposed. The
carry trade dynamic has played a large hand in yen movement in the last months,
as traders buy and sell yen based on global perceived risks. The dollar has also
been in the spotlight, after 2 U.S. rate cuts this year. The dollar rose against the British pound and the Canadian dollar.

Crude oil futures fell over 2% today, after U.S. inventories grew more than
expected last week. Crude oil has fallen off of recent all-time record highs, on
general speculation that a slowing U.S. economy would equate to less demand.
Natural gas futures fell nearly 2% as well.

Gold futures fell over 3%, in line with a rising dollar and falling oil
prices. Gold normally trades inversely to the dollar and with crude oil, which
is exactly what happened today. Copper futures slumped about 6.5%.

Grains were lower today. Soybeans were down fractionally, while corn fell
about 2%.

Stocks surrendered all of this week’s gains as more credit related losses
were disclosed, lackluster earnings, and mixed economic data combined to provide
a gloomy outlook. Click

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Stock Market Recap
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Economic News

U.S. CPI grew 0.3% last month.