Bonds Stick to Yearly Records

U.S. 10-year Treasury bond prices hovered near 2-year old record high prices today, on a shortened holiday trading day. Bonds have been pushing into new highs for most of November, on pervading negative sentiment surrounding the U.S. credit and housing markets. Many traders are predicting an outright recession for the U.S. economy, and bond prices have moved higher on the perceived weakness. Bonds typically rise on economic weakness, and fall on demand, so it's clear that traders have positioned themselves defensively in relation to bonds.

The yen rallied to the highest level in well over 2 years versus the dollar today, on global equity weakness. The yen also rallied versus the euro. The yen has been very sensitive to equity strength and risk perception in the last months, on account of the so-called carry trade. In the carry trade, traders borrow yen cheaply to invest in riskier assets; with more risk, traders buy back the yen to cover positions, and send the yen higher in the process. The dollar also hit new record lows against the euro, before falling back. There was no major economic news to drive the move, except for underlying negative U.S. sentiment.

Crude oil futures rose 1.7% to close just above $98 a barrel. This week, crude prices hit new record highs above $99, and nearly everyone has accepted the fact that crude will soon break the crucial $100 watermark. Crude pulled back at the end of the summer, on concerns that a slowing economy would hurt crude demand, but price bounced back and has mounted a record-smashing rally. Natural gas futures jumped over 2%.

Gold futures rallied over 2% today, as the dollar hit new record lows on the euro, and $100 oil is basically a shoe-in. Gold normally trades inversely to the dollar and with crude oil, which is exactly what happened today. Traders bought gold in favor a falling dollar, and to hedge against rising crude prices. Copper futures rose nearly 2%.

Grains were higher across the board. Soybeans rose about 1.5%, and corn gained nearly 2%.

The major indexes jumped across the board, boosted mostly by positive retail sentiments. Click here to read the rest of today's Stock Market Recap.