DIA +.04%, SPY +.26%, QQQQ +.53%
10-Year Treasury +6/32 yielding 4.09%
Oil +1.7%, closing at $56.58
Dollar +.2% versus Euro, down .25% versus Yen
The markets rose again today. A .2% increase in housing starts and 330,000 unemployment claims led traders to believe the economy is on firm footing. There were several reports stating traders are more bullish for the second half of the year, believing the economic fundamentals are solid. Yesterday’s Federal Reserve Beige book confirms this perception – the Fed report indicated most economic sectors are indeed solidly expanding.
The 10-Year Treasury rose 6/32 to close at 4.09%. The Philadelphia manufacturing survey came in a -2.2% compared to an estimated 10% increase. A reading below 0 indicates a manufacturing contraction. This negative reading combined with this weeks’ low inflation numbers led traders to believe inflation is under control.
Oil increased 1.7% to close at $56.68/bbl. Summer is typically the heaviest driving season, which leads to increased oil prices for consumers. As a result, traders bid up oil. OPEC also released a report about 2005 demand that projected world oil demand 100,000 barrels/day above current OPEC production. In addition, Wednesday’s weak inventory report and near capacity production report is still concerning some traders about the overall supply and demand situation in the oil market.
The dollar was up .2% versus the Euro and down .25% versus the Yen. The dollar’s recent gains versus the Euro are less about US growth and more about continued fears regarding the EU’s future. Today, EU ministers met to discuss the EU budget and there were reports regarding possible disagreements. This further increases trader’s concerns about the Euro’s future. Technically, the dollar is very overbought relative to the Euro. The dollar recently topped near 109 Yen/Dollar and has since fallen a touch. However, the move is likely mere profit taking as most currency traders have focused on the Euro.