Oil Slides, Nat Gas Hits 2-Year Lows
U.S. 10- and 2-year Treasury bond yields rose today, after a
government report showed that retail sales rose unexpectedly in August.
Investors have been betting that a slowing U.S. economy will force the Fed to
keep rates at the same levels, but this last report showed that the economy
might not be slowing as much as once thought. Interest rate futures show
about an 80% chance that the Fed will not raise rates before the year is out.
The euro rallied against the yen and the dollar today after
the ECB President said that the central bank needed to be “vigilant” on
inflation, a sign that the bank will continue to raise rates through the end of
the year. Japan has wavered in its public stance on raising rates, and the
U.S. meets next week to determine if rates will remain at 5.25%. The yen
advanced moderately against the dollar.
Crude oil fell 1.1% to close at $63.27 a barrel after
inventories showed a jump in natural gas inventories. Oil has been
steadily declining over the past weeks, on a cooling geopolitical scene, ample
inventories and an expectation of a demand slowdown, brought on by a broad
global economic slowdown. Natural gas fell 10% to close at 2-year lows on
cool weather and healthy inventories.
Gold futures fell 1.7% to close at $586 an ounce as investors
see demand slump for the safe-haven futures. Gold has been mirroring oil’s
moves over the summer, so this move down comes expectedly to most investors.
Copper fell 1.5% on fears that slowdowns in China and U.S. will severely hurt
demand for the metal.
Softs fell today. Cocoa dropped 0.2%, coffee fell 0.5%,
orange juice fell 0.5% and sugar fell 1.7%.
Grains traded mixed today. Corn fell 0.4%, wheat fell
1.1%, soy jumped 0.4% and oats rose 1.3%.
Meats traded mixed today, with cattle down 0.7% and
porkbellies up 1.4%.
Weekly Jobless Claims Fall Unexpectedly (full
story).
Retail Sales See Some Additional Growth In August (full
story).