Interest Rates And Inflation Worries
Interest Rates
were in focus today with first the Bank of England
(report)
and then the ECB (report)
leaving rates unchanged. Jean-Claude Trichet, President of the ECB, commented
after the announcement that an interest rate hike in May was unlikely too.
Initial Jobless Claims unexpectedly fell last month
(report)
but with the monthly Employment Report scheduled to be released tomorrow,
today’s data had little impact on the markets.
Treasuries closed lower, with a number of factors weighing on traders minds. The
robust job market and soaring commodity prices suggest the Fed will be unlikely
to cease raising interest rates anytime soon.
The US Dollar rose against the Euro, Yen and Swiss Franc but continued to lose
ground against the commodity currencies (AUD and CAD). The Euro plunged more
than 100 pips versus the US Dollar after Trichet’s comments on European interest
rates.
Commodity Prices Soar
Commodity prices continued to climb, causing
investors to fret over higher inflation and higher interest rates.
In the energies, Natural Gas declined despite the EIA reporting lower
inventories. However, Crude Oil, Unleaded Gas and Heating Oil continued to march
higher. Crude oil hit $68 before settling just below that level. Unleaded Gas
hit a six-month high.
Gold hit $600 for the first time since 1981. Silver
hit the highest level since September 1983 and Copper hit another new all-time
high.
Bank of England leaves benchmark Interest Rate unchanged at 4.5% (report)
ECB leaves benchmark Interest Rates unchanged at 2.5% (report)
Weekly Initial Jobless Claims down 5,000 to 299,000 (report)
EIA – Natural Gas inventories fall 10 BCF
Ashton Dorkins
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