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U.S. 10-year Treasury notes continued to fall today, extended losses after hitting yearly highs just last week. Bonds rose consistently from July through August, on worries that the U.S. credit crisis would trigger an overall economic slowdown. However, a positive jobs report today helped to push bonds lower, in addition to the fact that basically everyone is expecting the Fed to cut rates next week. Bonds typically rise on economic weakness and fall on strength, so traders seem to be relaxing ultra-defensive bond bets.
The yen plummeted against the euro and the dollar today, on speculation recent political turmoil will cancel any possibilities for a rate hike this year. The Prime Minister of Japan resigned yesterday, and according to some traders, political unrest in Japan has historically meant that the BoJ won't change rates. The dollar has been under major pressure in the last weeks ahead of the Fed meeting; with an almost guaranteed rate cut on the way, many traders are taking positions against the dollar on overall slowing growth and credit exposure. The dollar was slightly up versus the euro.
Crude oil continued to climb today, inching into new record territories. Crude oil fell about 10% in early August, only to completely recover those losses during the latter half of the month. Traders are worried that current crude supplies and global production rates will not be able to handle heavy U.S. demand projected for Q4. Natural gas futures fell nearly 6% after an unexpected increase in gas reserves.
Gold futures fell slightly today after the dollar held up versus the euro today. Gold normally trades inversely to the dollar and with oil, and it was dollar strength speculation that helped to push gold futures slightly lower. Copper futures were up over 1% on positive economic growth sentiments.
Grains were mixed. Soybeans rose about 0.4%, while corn fell 2.5%.
Stocks closed higher on Thursday, as weekly jobless claims rose less than expected and some positive stock news helped to raise investor sentiment. Click here to read the rest of today's Stock Market Recap.
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