Bonds Rest on Light News

U.S. 10-year Treasury bond prices fell slightly today, on a day with no major economic news coming out of the U.S. Bonds rose last week, as the dollar fell, on widespread concern that the U.S. subprime mortgage fallout will affect the entire U.S. economy and growth. Housing sector problems are also weighing on investors, and represents the other major problem that most traders see in the current U.S. economic equation.

The majors were basically flat against each other today, with the dollar gaining on the euro after amassing moderate losses last week. The U.S. dollar has been falling hard lately against both the euro and the yen, as traders bet that the subprime mortgage weakness will spread to other areas of the economy, ultimately affecting U.S. growth and production. No major economic reports are due out today, also helping to contribute to the lack of volatility. The dollar fell against the Canadian dollar, and also dropped against the British pound slightly.

Crude oil prices fell around 1.5% today, after it was reported that OPEC was concerned that elevated prices could negatively affect the world economy. OPEC hinted that the organization might increase production limits, to flood the market with supply and drive prices lower. OPEC has tried to influence prices in the past through statements and output reductions, and those efforts have seen mixed results. Natural gas futures fell over 6% to 7-month lows on a supply glut.

Gold futures fell about 0.5% today, as the dollar managed to gain on the euro. Gold normally trades inversely to the dollar and with oil; today's gold trading was dominated by dollar strength, as traders bought the dollar over gold.

Grains fell today. Soybeans fell nearly 4% and corn dropped about 2.6%.

Stocks moved sharply higher to start off the week after new merger and acquisition activity. Today's M&A deals took place in a wide variety of market sectors. These included oil drilling, equipment rental, and technology. Better-than-expected earnings from Merck and Schering-Plough also helped the indices move higher. Click here to read the rest of the Stock Market Recap.

John Lee
Associate Editor
johnl@tradingmarkets.com

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