Wednesday, March 08, 2006

Tide Turns Out

Opec agreed to hold output steady and the EIA reported a whopping crude inventory build of nearly 7 million barrels, compared to a consensus expectation of a typical 1 million barrel build.

Interestingly, just about every thing is trading lower; the Dow, the dollar, oil's flirting with $60, the 10-year's off, the CRB's sucking wind, and gold's going for $10 less today. The Fed Funds futures are pricing in a 100% probability of a quarter point rate hike at the next Fed meeting and actually pricing in a slight probability of more than a quarter point. That's particularly curious given that recent data is no more inflationary than the data that's come in over the past say six months. About the only things trading higher today are some grains, a few other consumable commodities, and foreign currencies.
Opec agreed to hold output steady and the EIA reported a whopping crude inventory build of nearly 7 million barrels, compared to a consensus expectation of a typical 1 million barrel build.

Interestingly, just about every thing is trading lower; the Dow, the dollar, oil's flirting with $60, the 10-year's off, the CRB's sucking wind, and gold's going for $10 less today. The Fed Funds futures are pricing in a 100% probability of a quarter point rate hike at the next Fed meeting and actually pricing in a slight probability of more than a quarter point. That's particularly curious given that recent data is no more inflationary than the data that's come in over the past say six months. About the only things trading higher today are some grains, a few other consumable commodities, and foreign currencies.

Consistent with my post on gold yesterday, the market is not acting like gold is a hedge. Moving in the same direction it's acting more like a speculation. The same goes for oil, other metals, and financials.

posted at 11:34 AM