Negativy Reigns Supreme Ahead of Holiday

U.S. 10-year Treasury bond prices pushed higher into 2-year record highs, as
traders continue to worry about the threat of a major U.S. economic slowdown.
The credit crisis and housing problems have led to pervasive negative sentiment
surrounding the entire U.S. economy. With more massive write-downs being
announced almost daily, traders are waiting for the other shoe to drop. Bonds
typically rise on economic weakness and fall on strength, so traders have
positioned themselves defensively into the end of the year.

The dollar hit new record lows versus the euro today, and sank to 2-year lows
on the yen. As the credit crisis continues to unravel, banks keep announcing
massive losses and oil pushes towards new records above $100, pervading
sentiment has turned extremely negative towards the U.S. dollar. Traders claim
their might be no end in sight to dollar weakness. The yen is also rallying
versus the euro, on global equity unrest. The so-called carry trade has played a
large hand in yen movements in the last months. Traders have been buying yen on
equity weakness, and selling on strength.

Crude oil prices hit new record highs above $99 a barrel today, before
falling back from the records. Crude has been surging on high levels of demand,
but recently pulled back on concern that U.S. economic weakness could undermine
demand levels. Today, crude inventories rose unexpectedly, which helped to keep
prices from closing at new highs. Natural gas futures rose just over 1%.

Gold futures jumped over 1% today, in line with a falling dollar and record
crude prices. Gold normally trades inversely to the dollar and with oil, which
is exactly what happened today. Copper futures were down over 4%.

Grains were mixed today. Soybeans were up fractionally, while corn was
slightly lower.


Economic News

U.S. leading indicator index fell 0.5% in
October, more than expected.