Oil, Gold Bounce Back from Losses

U.S. 10-year Treasury bonds fell back today from near yearly highs, after a
retail sales report showed more growth than expected. Bonds have been pushing
into yearly highs for a few weeks now, on general negative sentiment surrounding
the U.S. economy. Housing and credit worries have plagued the U.S. since the
late summer, and bonds are paying the price by moving higher and higher. Bonds
typically rally on economic weakness, and fall on strength.

The euro rallied across the board, and moved near to all-time records set
just last week. The yen slumped versus the major currencies, on perceived equity
strength across the world. Traders borrowed yen, and used the borrowed currency
to invest in more profitable assets. The yen carry trade dynamic has played the
primary role in yen movement over the last few months. U.S. dollar weakness,
with the dollar hitting fresh lows nearly weekly on the euro, has also been a
major currency focus. The dollar fell against the Canadian dollar, but rose
against the British pound.

Crude oil prices rose over 3% today, on speculation that tomorrow’s energy
report will show that U.S. inventories declined over the last week. Crude hit
record highs just last week, on demand worries, but pulled back this week on
slow growth worries in the U.S. Today, demand worries were back in the
spotlight, with traders pushing energy prices higher. Natural gas futures fell
over 1%.

Gold futures rallied over 2% today, in line with a falling dollar and rising
oil prices. Gold normally trades inversely to the dollar and with oil, which is
exactly what happened today. Traders bought gold to hedge against rising energy,
and as a safety from a falling dollar. Copper futures rose nearly 5%.

Grains were higher today. Soybeans rose over 2%, and corn rallied about 2% as

Economic News

Retail sales grew 0.2% last month, more
than expected.