TradingMarkets 7 Futures You Need To Know For 2006
A number of markets closed early today and
all US markets will be closed on Monday for the New Year’s holiday. On top of
that, no economic news was released today so activity was light on the last
trading day of the year.
While equities ended the year virtually flat, the bull market
in commodities continued. Let’s take a look at some of strongest performers from
2005.
Energy was the market that received the most attention and
deservedly so. With rising demand coming from China and India supplies were
tight, then came hurricanes Katrina and Rita to further disrupt supplies in the
Gulf of Mexico.
Crude Oil, Unleaded Gasoline, Heating Oil and Natural Gas all
posted large gains.
Chart courtesy of FutureSource.com
The metals also did very well. With inflation
rising Gold hit multi-year highs, despite a strong performance from the US
Dollar.
Chart courtesy of FutureSource.com
Supply issues pushed Copper to new record highs
throughout the year.
Chart courtesy of FutureSource.com
Orange Juice almost doubled in 2005, also boosted by the hurricanes that hit
Florida.
Chart courtesy of FutureSource.com
Sugar was another commodity that nearly doubled in price!
Chart courtesy of FutureSource.com
As I mentioned earlier, the US Dollar also had an impressive year.
Chart courtesy of FutureSource.com
Part of the reason behind the US Dollar rally was the Federal Reserve policy of
raising interest rates. In December the Fed raised rates for the 13th
consecutive time. This week the yield curve inverted with 2-Yr Treasuries
yielding more than 5-Yr Treasuries and 10-Yr Treasuries. An inverted yield curve
has presaged the last 4-recessions.
When you compare the charts (2yr/5yr/10yr), the first thing that stands out is
that the flattening of the yield curve has been due to short-term rates rising,
while long-term rates have remained virtually unchanged. Many pundits have have
wrestled with how and why this happened (including Alan Greenspan himself, who
called it a “conundrum”).
Regardless of the reasons why, this is something worth watching very closely in
2006.
Chart courtesy of FutureSource.com
Happy New Year and Best Wishes for 2006!
Ashton Dorkins