FUTURES MARKET RECAP

Bonds Higher on Widespread Negativity
Bonds rose today on general economic worries, following a major announcement from major bank Citigroup yesterday, warning of deepening losses stemming from the subprime lending sector. Bonds rose through the summer on pervading worries that a struggling housing market could derail the entire economy. The subprime mortgage meltdown during the end of the summer proved that those concerns were valid, and bonds sank ahead of the Fed's anticipated rate cut. Now, bonds are trading within a new range, and look to be moving towards yearly highs set just a few weeks ago.
The yen was up across the board today, as equity weakness around the world led to yen buying. Traders sold off riskier positions which were initially entered using borrowed yen, leading to yen gains on overall market weakness. The carry trade has been a major factor in the currency markets over the past few months. The dollar was slightly higher versus the euro today, but most of the action revolved around yen strength.
Crude futures kept rising today, at one point reaching a new record high above $88 a barrel. Crude prices have shot higher in the past week +7.7% on underlying concerns that Q4 demand is steadily outpacing reserves. Crude fell about 10% during the end of the summer, but bounced and has now rallied to new highs. Crude has now rallied nearly 30% since late August lows. Natural gas futures fell about 1% today.
Gold futures inched higher today, boosted by dollar weakness and rising oil prices. Gold normally trades inversely to the dollar and with oil, which is exactly what happened today. Traders bought gold in favor of dollar weakness, and in the face of record oil prices. Copper futures were down about 1.3%.
Grains were down across the board. Soybeans fell about 1%, while corn dropped 0.6%.
Stock declined on Tuesday, with oil prices hitting another record high, closing above $87 per barrel. Concerns about the housing slump persist, after comments by both Fed Chairman Bernanke and Treasury Secretary Paulson merely reinforced the view that the worst is still to come.
Economic News
U.S. industrial production rose 0.1% in September, hitting expectations.
By John Lee