Oil Hits New Record, Gold Surges
U.S. 10-year Treasury bond prices rose slightly today, on light economic
news. Today, Citigroup announced that borrower defaults are accelerating,
highlighting underlying lending and housing worry points. Bonds rose steadily
through the summer on housing weakness, but fell on anticipation of a rate cut.
Bonds typically rise on economic weakness and fall on strength, so it’s clear
that traders have positioned themselves defensively in relation to bonds.
The yen rose today against the dollar and the euro, reversing early losses,
as traders exited the carry trade to avoid equity losses. Today, US markets
headed lower, prompting investors to buy back previously borrowed yen. The yen
rose accordingly. The dollar was slightly lower versus the euro today, but most
of the action revolved around yen strength.
Crude oil futures shot higher, hitting new records above $86 dollar on Middle
East worries. Turkey has threatened to invade northern Iraq to deal with Kurdish
militants in that area of the country, it was reported. Any major upsets or
situations in the Middle East generally lead to rise in crude prices, as the
region is a major supplier of crude supplies for the world. Last summer, a war
in Lebanon led to then-record highs. Natural gas futures also rose, up nearly
7%.
Gold futures rose over 1%, propelled by dollar weakness versus the euro and
record oil prices. Gold normally trades inversely to the dollar and with crude
oil, which is exactly what happened today. Traders bought gold as a safety from
underlying dollar weakness, and soaring crude prices. Copper futures were also
up about 1%.
Grains were higher today. Soybeans rose about 1%, while corn jumped over 3%.
Stocks declined on Monday, weighed down by Citigroup’s disappointing
earnings. Click
here to read the rest of today’s
Stock Market Recap.
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