FUTURES MARKET RECAP

By John Lee

Oil, Gold and Bonds Extend Gains
U.S. 10-year Treasury bonds rose today to nearly 2-month highs, on expectations that housing reports to come later this week will show weakness. Bonds shot higher last week on subprime mortgage worries. Bond prices usually rise on economic weakness and fall on strength, so a major move higher in bond prices evidenced a general uneasiness towards the U.S. economy. Bonds have been rising fairly steadily since the beginning of February, on weaker than expected housing reports.

The yen rose against the dollar and the euro today, after a Japanese government official said that the economy has recovered, opening the door for rate hikes in the near future. Japan has struggled to produce economic numbers worthy of a rate-hike, pushing the yen to record lows against the euro and yearly lows against the dollar. The international currency market has favored currencies backed by inflationary, positive-growth economies, which puts the euro in the best light. The yen should remain in the spotlight in the coming weeks.

Crude oil futures rose 0.5%, on speculations that this week's Energy Department report will continue to show major losses in U.S. fuel reserves. Last week, crude broke though crucial resistance at $60 a barrel and held, on news that stockpiles of U.S. fuel fell dramatically from the week before. Crude fell over 30% from record July highs before bouncing on cold weather. U.S. plans to double its strategic oil reserve have also helped to boost oil and hold above 60 a barrel. Natural gas futures fell over 1% on speculations that the worst cold weather is over, and that energy use will decline with spring.

Gold futures rose 0.5%, pushing 9-month highs, as oil moved higher today. Gold usually moves inversely to the dollar and with oil, and it was oil action that dominated today's gold trading. Traders bought gold as a safe haven against rising energy prices and inflation worries, extending a broad commodities rally which was boosted by last week's CPI report.

Copper rose just over 0.5% today.

Grains traded mixed today. Wheat fell nearly 0.5%, corn fell about 0.1% and soybeans rose fractionally.

Economic News
No major economic news to report for the U.S. today.