Gold Hits Another New Record

U.S. 10-year Treasury bond prices rallied today on the known troubles
affecting the market. The credit and housing crisis has led many traders to
predict a recession for the U.S. economy, based on the massive losses which are
spreading through the varying sectors. Bonds have shot up to 3-year record highs
on negative expectations, despite a basically guaranteed rate cut to come at the
end of the month. Bonds typically rally on economic weakness and fall on
strength, so it’s clear that traders have taken a defensive position in this
economy, relative to bonds.

The dollar sank to just off all-time record lows versus the euro, and also
dropped against the yen today. Traders sold the dollar on heavy betting that the
U.S. Fed will cut interest rates at the end of the month, as banks and major
corporations continue to take massive losses on a broad economic slowdown. The
housing and credit market crisis has spread to affect a number of different
sectors, and many traders are calling for an all-out recession for the U.S. The
euro was also down against the yen, but most of the action today surrounded
dollar weakness.

Crude oil futures rallied today after 3 straight down days; oil prices were
up about 1.5%. Crude oil prices hit record highs 2 weeks ago on demand worries,
reaching $100 a barrel before falling back. Since then, crude prices fell around
8% before today’s bounce. Traders are still very concerned about oil demand
levels compared to inventory levels, and many traders are looking for oil prices
to go even higher. Natural gas futures rose moderately today.

Gold futures rose to a new record high today above $900, on dollar weakness
and high oil prices. Gold normally trades inversely to the dollar and with oil.
Today, traders bought gold on dollar weakness and rising oil prices. Traders use
gold as a hedge against currency weakness and inflation. Copper futures were
also moderately higher.

Stocks rallied on Monday as the prospect of further rate cuts, and IBM’s
strong earnings, provided a ray of sunshine for investors. Click

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Stock Market Recap

Economic News

No major economic news to report for the
U.S. today.