Stocks looked like they were going to roll over again this morning, but caught a late day bid as some bargain hunters swooped in to buy shares. Ben Bernanke reiterated his confidence in the US economy and comments from several other FOMC members made it clear that rates were likely to stay low for longer than many already suspected. The Euro managed to stay in the black on the day which also helped bolster risk assets. The VIX lost 8% on the day and credit markets appeared to stabilize a bit. Volume was on the heavier side today, but breadth was only modestly heavier. Not exactly the kind of day the bulls would like to see near the bottom of the market, but a welcome break from the constant slide lower.
From Daily Futures:
U.S. Economy
Federal Reserve Chairman Bernanke tried to calm market fears today by saying that Europe has enough money to meet their debt obligations and he does not expect the U.S. to fall into another recession. The June 2011 eurodollars were up .03 at 98.795.
The U.S. Treasury Department sold $36 billion of 3-year T-notes at a median yield of 1.19% with a bid to cover ratio of 3.23.
Grains and Cotton
According to yesterday afternoon’s crop ratings, the U.S. crops are off to a good start this year. December corn closed up 1.50 cents at $3.372 after falling five of the past six days.
July wheat was unchanged at $4.327 after yesterday’s USDA crop progress report showed that the winter wheat harvest has officially begun.
Livestock
August cattle ended up .10 at 87.82 with help from today’s slightly higher stock market.
Energies
The U.S. Department of Energy (DOE) said in today’s Short-term Outlook that they expect the price of West Texas Intermediate crude oil to “average $79 per barrel this year and $83 per barrel in 2011, both about $3 lower than in last month’s Outlook.” The DOE also said that it expects retail regular gasoline to average $2.79 a gallon this summer. July crude oil closed up .55 at $71.99.
The DOE increased its estimate of U.S. natural gas consumption in 2010 from 64.4 to 64.9 billion cubic feet per day. They expect the spot price of Henry Hub natural gas to average $4.62 per thousand cubic feet in 2010 and $5.22 in 2011. July natural gas closed down 10.8 cents at $4.808.
Metals
The CEO of GFMS Ltd. told Bloomberg news that he expects gold to trade between $1,050 and $1,300 an ounce for the rest of 2010. Of course, he also cautioned that a worsening of the situation in Europe would send gold prices even higher. August gold closed up $4.80 at $1,245.60.
Currencies
Fitch Ratings suggested that the U.K. may have to get more aggressive in cutting its budget deficit in order to keep its AAA credit rating. The June British pound closed down .0089 at $1.4381.
Canada’s Mortgage and Housing Corp. said that housing starts were at an annual rate of 189,100 units in May, down from 201,800 units in April and weaker than expected.
The June euro finished down .0012 at $1.1924 with unconfirmed suspicions that the Swiss National Bank may have intervened and bought euros. Again, that was not confirmed.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.