Bonds Rally on Jobs Numbers

U.S. 10-year Treasury bond prices notched fresh 3-year highs today, on more weak economic reports out of the U.S. Separate jobs reports out today pointed to slowing job growth and rising unemployment; job growth is one of the last bastions of this waning bull market, and traders were looking for better numbers. The weak jobs report led to widespread bond purchases, as traders look for safety in the long-term government loan. Bonds typically rally on economic weakness and fall on strength, so it's clear that traders have positioned themselves defensively to start the year.

The yen surged today versus the dollar and the euro, on negative reports out of the U.S., and global uncertainty in the equity markets. The U.S. has had a rough start to 2008, and the yen has reacted strongly to weakness, as traders buy back borrowed yen in the so-called carry trade. The carry trade has been the single biggest influence on yen movement in the last few months, as traders buy and sell yen based on perceived global equity risks. The credit crisis and housing troubles which came to a head at the end of the summer in 2007 seems poised to derail the U.S. economy. Traders are calling for a recession, or a major economic setback, based on the negative factors in the market.

Crude oil futures sank around 1.7% today, falling on economic growth worries. Echoing sentiments from late last year, traders sold oil today on concerns that slowing U.S. growth will curb U.S. oil demand. Crude hit new record highs at $100 a barrel on the first day of the trading year this year, and most traders are watching for crude to go even higher. Natural gas futures were up moderately.

Gold futures fell about 0.4%, in line with falling oil prices. Gold normally trades inversely to the dollar and with crude oil, and today traders focused on falling oil prices and sold the precious metal. Copper futures fell moderately today, ending a 2-day rally.