Stocks surged 0.8% on no real substantive news. Optimism is certainly fueling the move. At this point it appears inevitable that the 1050-1060 range is not far off as that seems to be the area the consensus has targeted.
From Daily Futures:
The Federal Reserve’s Beige Book said that “economic activity continued to stabilize in July and August.” They also noted that “most Districts reported modest improvements in the manufacturing sector.” The December 2010 eurodollars were up .015 at 98.225.
The Mortgage Bankers Association said that its index of mortgage applications jumped up 17% last week to the highest level since May. Fixed rate 30 year mortgages were priced at 5.02% last week, the lowest since May. The December U.S. T-bonds finished down 8/32nds at 118.11/32nds.
The U.S. Treasury sold $20 billion of 10-year T-notes for a yield of 3.51%, slightly less than expected.
Grains and Cotton
The USDA said that China bought 110,000 tons of U.S. soybeans. November soybeans were down 8 cents at $9.285.
Australia’s Bureau of Agricultural and Resource Economics will release its next wheat crop estimate next week and an article in Bloomberg news suggests that the crop may be around 23 million tons, the biggest in four years. December wheat was down 2.75 cents at $4.562.
Statistics Canada said that there were 6.56 million tons of wheat in storage on July 31st, up 49% from a year ago.
Canada’s Mortgage and Housing Corp. said that housing starts increased 12% in August to 150,400 units, far more than expected. November lumber ended up $1.00 at $174.40.
According to ICE Futures, U.S. cocoa inventories totaled 2.79 million bags yesterday, the lowest in nearly seven months. December cocoa closed up $80 at a new contract high of $3,033.
So far the Atlantic hurricane season has been relatively uneventful. November orange juice ended down .65 at 90.75.
OPEC members meet in Vienna later today. The weekly U.S. crude oil inventory report will be released tomorrow due to this week’s holiday schedule.
Global oil demand peaked at 86.5 million barrels per day in 2007, before the world recession hit. A private firm, IHS-Cambridge Energy Research Associates, said that they expect global demand to return to that level in 2012 (see article). November crude oil ended up .23 at $71.82.
The U.S. Department of Energy said in today’s Short-term Energy Outlook that they expect the price of regular retail gasoline to fall from $2.62 a gallon in August and September to an average of $2.56 in the fourth quarter.
An index of consumer confidence in the U.K. increased from 61 to 63 in August, the highest in over a year. The September British pound was up .0045 at $1.6531.
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.