Yen Plummets on Global Rally

U.S. 10-year Treasury bonds were flat on the day,
as the U.S. markets continued to rally after suffering major losses last week.
Bonds opened up lower, but then moved higher as the trading day progressed.
A U.S. jobless claims reported a decline in initial filings, hinting that
weakness in the housing sector has begun to spread to other areas of the
economy. Treasuries usually rise on economic weakness and fall on
strength, so traders took the initial claims report as a negative for the
economy. The jobs report to come tomorrow should shed more light on U.S.
employment figures.

The yen fell against the euro and the dollar
today, as the global stock market bounce led to a return to the carry trade with
the yen. As more and more investors borrowed the yen to buy more
profitable assets, the yen’s worth on the international market plummeted.
The ECB also raised rates today, confirming their hawkish position to maintain
vigilance on inflation. The international currency market favors
currencies backed by inflationary economies pressed with the need to raise
rates. Europe has proven itself, while Japan has struggled to produce
consistently positive results. The dollar reached yearly lows against the
euro late last year, and is trading relatively near those levels.

Crude oil futures fell about 0.4% today, on
speculation that U.S. supplies will be able to meet consumption demands easily,
despite any unexpected cold snap. Most energy contracts trade in sync with
the weather, as cold weather equates to more energy usage to heat homes.
Natural gas fell about 1% on similar supply sentiments.

Gold futures rose about 0.4%, continuing a
rebound after last week’s 7% slide. Gold fell with the global markets, as
traders liquidated positions in all asset classes for protection in cash.
Gold has been bouncing back, though, on widespread sentiment that a rebound in
the markets will equate to more commodity and metals investments. Gold
usually trades inversely to the dollar and with oil, but stock market action has
dominated recent trading. Copper rose nearly 2% on similar
commodity-demand sentiments.

Grains traded fractionally mixed today.
Corn fell 0.4%, wheat dropped about 0.3% and soybeans rose 0.2%.


unemployment claims fell by 10,000 to 328,000.

John Lee

Associate Editor