U.S. 10-year Treasury bond prices fell the most this week in over a year, after the U.S. released better than expected job growth numbers on Friday. The non-farm payrolls report came in much stronger than what analysts were looking for, prompting traders to sell bonds on speculation that inflation is rising. Bond prices typically fall on strength and rise on weakness, so it's clear that traders took today's report as a good sign for the future of the U.S. economy. Bonds fell through May and much of June before bouncing on 11-month lows.

The dollar jumped against the yen, but fell on the euro after a positive jobs report out of the U.S. Analysts were looking for a 125k gain in non-farm payrolls in June, but the number actually came in at a 132k gain. The unexpected jump in jobs added helped to boost U.S. sentiment against Japan, but the euro remained dominant against the U.S. currency. The dollar managed to scrap back some losses against the euro through the day. The euro moved to new highs against the Japanese yen. The dollar plummeted against the Canadian dollar, despite the positive U.S. data.

Crude oil rose nearly 1% during today's trading to a 10-month high, on concerns that unrest in Nigeria could weaken global oil supplies. Oil trades sensitively to any news of potential supply disruptions, such as reports of Nigerian rebel attacks or Iranian confrontations. Oil has been rising fairly steadily since the end of May. Natural gas futures fell 3.2% on comfortable inventories.

Gold rose 0.6% as the dollar fell against the euro. Gold normally trades inversely to the dollar and with oil; today's dollar weakness led to gold buying. Gold has also been trading in sync with interest rates, whose high rates are lessening demand for the safety metal. Copper futures rose fractionally on South American strike threats.

Grains rose today. Soybeans gained about 0.9% and corn rose 2.7%.

John Lee
Associate Editor
johnl@tradingmarkets.com