Oil Closes Below $70

U.S. 10-year Treasury bond yields rose for the second straight
day, after minutes from the August 8th Fed meeting were released. Right
before the minutes were released, investors bet hard that there would be more
argument and conflict over the Fed’s decision to stop the rate hikes. Only
1 Fed member voted for a hike, and the minutes reflected a united Fed, with very
little support for a hike. This news led to a gain in bond yields, and a
drop in bond price. The Fed’s decision to stop the rate hikes has led to a
steady increase in bond price over the last 2 months, and could lead to more if
the Fed decides to continue the pause.

The dollar fell against the yen and the euro today, after Fed
minutes were released that showed a board unified in the rate pause. The
minutes further increased bets that the Fed is done raising rates for the time
being, and could even begin to lower the rates at the end of the year.
Europe looks set to raise rates before the year is out, possibly even two times.
Japan has fluctuated in statements and reports about their prospects to raise
rates. If Japan and Europe go ahead with the rate hikes, while the U.S.
maintains a pause, the dollar will continue to be in trouble on the global

Crude oil futures dropped 1.3% to $69.70 a barrel as Tropical
Storm Ernesto showed little signs of damaging oil fields in the Gulf of Mexico.
Natural gas rose 6.6% as traders brought the price of the expiring contract
closer to the October contract. Both oil and natural gas have see-sawed
throughout the summer, as geopolitical tensions and the weather worried
investors about energy supply issues.

Gold futures fell 0.8% to close at $619.10 an ounce, an
eight-week low, as investors see less and less to worry about inflation.
Gold has been trading hand-in-hand with oil throughout the summer, as investors
seek safety in the metal to guard against inflation and energy supply crisis.
Copper dropped 1.7% and aluminum fell 1.5%, while silver rose 1%.

Grains mostly fell today. Corn dropped 0.7%, wheat fell
1%, soy fell fractionally and oats rose fractionally.

The softs traded mixed across the board. Cocoa was up
0.7%, coffee was up fractionally, orange juice fell nearly 1% and sugar fell 2%.

The meats traded mixed, with cattle up fractionally and
porkbellies down nearly 1%.


Fed’s Fisher Says Getting Inflation Right Is Not An Easy Task

John Patrick Lee