Treasuries See Largest Weekly Gain Since March
U.S. 10-year Treasury bonds rose 1/32 to a yield of 4.788%, as U.S.
equities continued to drop. Treasuries saw the largest weekly advance in four
months on investors leaving the equities market as well as speculation on a
possible credit crunch.
The dollar rose to a 2-week high against the Euro and advanced the most
versus the pound since March. Subprime fears have brought U.S. investors back
into the currency.
Second-quarter GDP reports came in higher than expected posting a 3.4% rise
versus consensus of 3.2%. This was the strongest performance since the
first-quarter of 2006. Core PCE dropped from 2.4% to 1.4% compared to economist
expectations of 2.0%.
The dollar also bounced against the Canadian dollar for the third straight
day as investors unwound risky bets in commodity-linked currencies.
Crude oil futures rose 2.7% today after the GDP report showed higher growth,
indicating fuel demand will rise.
Gold futures fell 0.4% today on speculation that the rising dollar will
reduce gold’s demand as an alternative investment. Copper futures rebounded 0.7%
on the positive GDP report.
Soybeans gave back yesterday’s gains losing 0.8%, while corn futures rose 1.4%.
The global selloff continued on Wall Street today, after heavy overnight
selling in Asia and Europe. The selling engulfed all the major indices, as
investors shunned risk in the wake of the credit market turmoil and housing
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