Oil Sinks, Nears $90

U.S. 10-year Treasury bonds fell today, as U.S. equity markets rallied after
a rough week last week. Bonds hit new yearly highs on Friday, on general U.S.
economic concerns, and bonds were closed yesterday in honor of Veteran’s Day.
Bonds moved lower today, despite the obvious negatives effecting the U.S.
economy and markets. Bonds typically rise on economic weakness, and fall on
strength, so traders have positioned themselves defensively relative to bonds,
heading into the end of the year.

The euro rallied against the dollar today, recovering roughly half of
yesterday’s losses versus the U.S. currency. The yen also slumped across the
board, after the BoJ Governor Fukui kept rates at 0.5%, and said he was worried
about the rate of the yen’s advance in the last months. The yen has been gaining
on a broad unwinding of the carry trade, as traders buy back previously borrowed
yen. The dollar was up on the yen, despite weakness versus the euro. Overall, the
big story of the day was the BoJ announcement, and yen weakness.

Crude oil plummeted today, falling over 3%, after OPEC forecasted lower
energy demand for the rest of the year, and into 2008. Crude oil recently hit
record highs, barely missing the crucial $100 watermark, on general worries of
high demand levels, and instability in the Middle East. Today, crude was back
near the $90 mark, giving investors, and the entire economy, a much needed break
from soaring energy prices. The thought of a slowing U.S. economy has also
helped to lower demand forecasts for the near future. Natural gas futures were
basically flat.

Gold futures fell about 1% today, on sinking oil prices. Gold normally trades
inversely to the dollar and with crude oil, and today, gold fell in line with
oil. The dollar also fell against the euro, but gold traders focused on
plummeting energy prices, bringing the safety commodity lower. Copper futures
were basically flat.

Grains were mixed today. Soybeans gained about 1%, while corn fell 1.2%.

Stocks surged on Wednesday, ending a four day slump, as positive news from
Goldman Sachs, and higher profit at Wal-Mart, helped to raise investor
sentiment. Click

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