Oil, Gold Plunge On Slowing Economy
U.S. 10-year Treasury yields were little changed after today’s
trading, resting at the lowest levels since mid-April. Bond price has shot
up over the last 2 months, as the Fed ended its streak of raising rates.
With this week’s inflationary numbers showing a cooling economy and inflationary
pressures, the Fed is not forecast to raise rates in the coming meeting in
September. Yields for the 10-year bond are currently 4.86%, while the
5-year yields are 4.81%. Investors are beginning to more readily accept
Bernanke’s initial policies, as more and more data point to a slowing economy.
The U.S. dollar was little changed against the yen and the
euro after a sell-off this week prompted by inflation numbers that projected a
continuation of the hike pause. The dollar has fell hard against the yen
and the euro, so a pullback could be expected before the downtrend continues.
Investor sentiment continues to be bearish on the dollar, as the ECB and BoJ are
both expected to raise rates before the year is out.
Crude oil futures fell 2.2% to $70.30 a barrel as economic
numbers point to a cooling demand for energies in general. A slowing U.S.
economy would require less energy to fuel, and comfortable inventory numbers
also point to a surplus supply. Gasoline futures also fell today, down
2.7% to $1.92 a gallon. The tense situation in the Middle East has caused
great supply concerns, as Iran’s anti-U.S. stance would severely affect global
crude supply were a major conflict to occur. Natural gas was basically
unchanged for the day.
The metals fell across the board as sinking energy costs
reduced the demand for safe-haven commodity futures. Gold fell over 2% to
close at $625.30 an ounce, silver fell 2.4%, copper fell over 3% and aluminum
fell 1.3%. Gold has been trading hand-in-hand with oil over the last
months, as energy fears continue to push and pull the demand for safe-haven
futures.
Softs traded mixed today, but mostly lower. Cocoa
dropped 2.6%, coffee fell 1% and sugar fell 3.5%. Sugar, on the other
hand, rose 3.5% to close up for the day.
Grains mostly fell today as temperatures in the Midwest eased
of their record levels from earlier in the summer. Rain and cooler
temperatures helped to lower the cost of most grains. Corn fell 1%, wheat
dropped 2%, soy dropped 0.15% and oats fell 0.4%.
Meats traded flat to higher, with cattle trading fractionally
lower and porkbellies rose nearly 4%.
Philly Fed Index Rises Much More Than Expected In August (full
story).
Leading Economic Indicators Index Rises In Line With Estimates
(full
story).
John Patrick Lee