Oil, Gold Continue To Decline

U.S. 10-year Treasury bonds traded with little change today,
hovering near 5-month highs.  Bond prices have shot up over the summer, as
the Fed declined to lift rates in June and looks to continue the pause at the
September meeting.  Multiple economic reports throughout the summer have
pointed to a slowing U.S. economy that does not need to worry about containing
inflation.  Currently, interest rate futures are showing a 12% chance that
rates will be raised before the year is out.  The next Fed meeting is on
September 20th.

The yen rallied against the dollar and the euro today after a
German Finance Minister said that Japan’s weakened currency will be a topic of
discussion at the Group of Seven’s next week.  The yen has been under
scrutiny after the BOJ has fluctuated in statements over whether there will be
more hikes before the year is out.  The euro is near record highs against
the yen, bolstered by the ECC’s statements that another rate hike is a sure
thing before the year is out.  The dollar also rallied against the euro. 
The dollar has also been in hot water, as a cooling U.S. economy has hurt
worldwide investor confidence in the currency.

Crude oil fell 0.4% to close at $67.26 a barrel as an Energy
Department report showed that inventories are up 5% from the same time last
year.  Oil has been steadily falling as the situation in the Middle East
cool, and there appears to be no significant immediate threat to the global
supply of crude.  Natural gas also continued to fall as moderate weather
across the country reduced the demand for natural gas in power plants.

Gold futures fell 2.6% to close at $624.90 an ounce as the
dollar strengthened against the euro.  Gold and oil have traded lock-step
all summer, and this move coincides with that pattern.  Confidence in the
dollar eases demand for the precious metal, and silver also suffered. 
Silver fell 3.8% in trading today.

Softs traded mixed today.  Cocoa rose 0.7%, coffee fell
2.6%, orange juice traded with little change and sugar fell 0.2%.

The grains traded mostly higher today, with corn up 2%, wheat
up 1% and soy up 0.8%.

Meats traded slightly higher, with cattle up 0.2% and
porkbellies up 0.5%.


Economic
News

Oil Inventories Slip, Gasoline Stockpiles Rise (full
story
).

Wholesale Inventories And Sales Increase In July (full
story
).

John Patrick Lee