Reports Show U.S. Economy Slowing More Than Expected
U.S. Treasury 10-year yields fell to six week lows, dropping
below 5% to 4.99%. A government report today showed that economic growth
was slowing more than expected, lending weight to bets that the Fed will not
raise rates in the coming August meeting. The report showed that the
economy grew at a 2.5% per year rate in the last three months, compared to 5.6%
during the first three months of the year. This rapid slowing of growth is
forcing investors to drive the price of the long term rate higher, as well as
causing a global sell-off in the dollar.
The Dollar fell to a two-week low against the yen today, and
also fell hard against the euro. A U.S. government report showed that
growth slowed 100% during the second quarter, an almost sure sign that the Fed
will not raise rates during the August meeting. With the economy cooling
so fast, investors are beginning to focus more on growth and less on containing
inflation.
Crude oil futures fell 1.7% to close at $73.24 as a U.S.
report shows that demand for oil could go down as the economy slows. The
situation in the Middle East remains at a stand-still, but the fighting
continues to dominate investor sentiment. Gasoline also fell, down 2.7% on
investor speculation that gas supplies will be able to meet demand for the rest
of the summer.
The metals traded with fractional difference today, with gold
up slightly and silver down slightly.
The softs traded mostly higher today. Cocoa was up 0.2%,
coffee was up 2.7% and orange juice was up just under 1%.
The grains traded mixed today, with no huge winner or loser.
Corn was down .2%, wheat was up .2%, soy was up .4% and oats were down 1%.
Meats traded lower today, with feeder cattle down fractionally
and potbellied pigs down .6%.
GDP Growth Slows While Price Growth Accelerates (full
story).