COMMODITIES : T-Bond Futures Surge on Jobless Report
Treasury bond futures prices soared Friday on the Chicago Board of Trade as news of a rise in the nation’s unemployment rate eased inflation fears.
On other markets, stock index futures surged, precious metals futures fell, energy futures dropped sharply, grains and soybeans advanced and livestock and meat futures were mixed.
The Labor Department’s report that the jobless rate rose to 5.6% in August was good news to bond futures traders who had been worried that the economy was expanding too quickly.
But even more welcome was the news that the average hourly earnings index, a measure of wages, rose just 0.1% last month after gaining 0.4% in July, said Sam Kahan, an economist with Kleinwort Benson Government Securities Inc. in Chicago.
“The market was saying to itself, ‘Hey, look, the unemployment rate is going down, yet the economy is strong and the cost of labor has not accelerated all that much,”’ Kahan said. “So they decided . . . inflation was not accelerating as much as was feared heretofore.”
The contract for December delivery of the U. S. Treasury bond rose 2 3/32 points to 87 19/32. On cash markets, the yield on the benchmark 30-year bond dropped to 9.14% from 9.30%.
Stock index futures also soared in reaction to the jobless rate. On the Chicago Mercantile Exchange, the contract for September delivery of the Standard & Poor’s 500 index finished 6.80 points higher at 265.60.
Precious metals futures initially plunged on the unemployment news, with platinum down nearly $19 an ounce at midday.
Late Price Recovery
Precious metals, commonly seen as an investment hedge against inflation, tend to rise and fall with inflationary expectations. Friday’s sharply lower crude oil prices added to the bearish tone in the metals markets, analysts said.
But precious metals prices recovered late in the session to close only modestly lower.
Peter Cardillo, commodities trading adviser with Josephthal & Co. in New York, said the metals markets remained technically weak despite the comeback.
On the New York Mercantile Exchange, platinum settled $7.90 to $8.20 lower, with October at $523.50 an ounce. On New York’s Commodity Exchange, gold settled 90 cents to $2.70 lower, with October at $431.80 an ounce; silver was 5.6 cents to 8 cents lower, with September at $6.518 an ounce
Energy futures prices settled sharply lower on the New York Mercantile Exchange, capping a bearish week brought on by reports of more overproduction by the Organization of Petroleum Exporting Countries.
West Texas Intermediate crude oil settled 29 cents to 33 cents lower, with October at $14.79 a barrel; heating oil was 0.40 cent to 0.58 cent lower, with October at 42.88 cents a gallon, and unleaded gasoline was 0.38 cent to 0.73 cent lower, with October at 43.98 cents a gallon.
Major Corn Sales
Grain and soybean futures finished mostly higher on the Chicago Board of Trade in a late surge fueled by technical factors in the absence of new supply-and-demand developments.
After the close, the Agriculture Department announced sales of 800,000 metric tons of U.S. corn to the Soviet Union. Rumors of a large corn sale to the Soviets had boosted corn futures prices earlier in the week.
Wheat settled 0.75 cent to 4 cents higher, with September at $4.01 a bushel; corn was unchanged to 1.5 cents higher, with September at $2.905 a bushel; oats were 0.75 cent lower to 0.50 cent higher, with September at $2.595 a bushel, and soybeans were 1.5 cents lower to 7.5 cents higher, with September at $8.73 a bushel.
Cattle futures posted strong gains in a late surge of pre-weekend position squaring on the Chicago Mercantile Exchange. Pork futures retreated on fears of slackening demand.
Live cattle settled 0.20 cent to 0.90 cent higher, with October at 72 cents a pound; feeder cattle were 0.10 cent to 0.83 cent higher, with September at 81.35 cents a pound; hogs were 0.10 cent to 0.45 cent lower, with October at 38.52 cents a pound, and frozen pork bellies were 0.42 cent to 0.82 cent lower, with February at 48.65 cents a pound.
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