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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Oil Futures Plunge, Bond Markets Vote America (Alert)

February 5, 2010.

Statsweeper registered alerts across the entire WTI oil futures complex yesterday.

Prices fell dramatically, with all six of the nearest contracts down over 5%. Four-month futures took the biggest percentage dive, dropping 5.6% from $78.60 to $74.21 per barrel.

Front-month futures fell 5.1%, from $77 to $73.06.

As widely reported, the fall in WTI was part of a larger sell-off in commodities. Triggered by strengthening of the U.S. dollar.

With all the focus on yesterday's selling, there was less press on the things being bought. Most notably U.S. Treasury notes.

Alerts registered for falling yields on three-, five- and ten-year Treasury securities. Yields plunged as traders piled into these investments, driving up prices.

This is significant. Many analysts recently predicted investors would shun U.S. government debt as America's deficit spending rises and the nation's monetary base remains ballooned by more than $1 trillion compared to just 18 months ago.

But it appears when the markets get shaky, buyers still see U.S. bonds as the safe-haven investment of choice.

Particularly interesting was investors' choice of Treasuries. Yields fell most notably for the three-year note, dropping nearly 7% to 1.34% yield. This is the lowest yield registered since late December 2009.

Buying was also strong on the five-year note, which fell 4.6% to 2.29% yield. And the ten-year, falling 2.9% to 3.62% yield.

This contrasts with previous "flight to safety" buying of Treasuries, where purchases were focused on short-dated notes and bills. Often with maturities of 52 weeks or less.

Bill yields did fall yesterday. With the 52-week bill down 12.1% to 0.29% yield. But overall buying of these securities hasn't been as strong as might be anticipated.

52-week bills are still trading in the same range that's prevailed over the last few weeks. By contrast, two-, three- and five-year note yields appear to have broken resistance, moving markedly lower than recent trading ranges yesterday.

If this trend continues, it suggest investors are willing to lock in their money with the U.S. government for longer periods than they were previously comfortable with. A big vote of confidence for America and the U.S. dollar.

Statsweeper is the financial community's premier data monitoring engine. The site tracks commodities, economics and finance data from around the globe, and alerts investors to critical changes and emerging trends. Visit www.statsweeper.com for more, and sign up for Pierce Points daily e-letter (www.piercepoints.com) for commentary on what the data mean for your commodities investments.
info@statsweeper.com

The information provided here is based on data collected by www.statsweeper.com and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any securities or commodities named herein. Information contained herein is obtained from sources believed to be reliable, but is in no way assured. All materials and related graphics provided herein and any other materials which are referenced herein are provided "as is" without warranty of any kind, either express or implied. No assurance of any kind is implied or possible where projections of future conditions are attempted. Readers using the information contained herein are solely responsible for verifying the accuracy thereof and for their own actions and investment decisions. The author of this article and the owners of www.statsweeper.com do not make any representations about the suitability of the information or any other materials that are referenced herein for any purpose whatsoever. The information contained herein does not constitute investment advice and neither the author nor www.statsweeper.com are registered with any securities regulatory authority to provide investment advice. Readers are cautioned to consult with a qualified registered securities adviser prior to making any investment decisions. The information contained in this publication has not been reviewed or authorized by any of the companies mentioned herein. The owners, employees and operators of www.statsweeper.com and their immediate families have no investment in the companies and products mentioned in this article. Statsweeper values the privacy of its users and does not share personal information with anyone, ever.

By. Dave Forest of Notela Resources


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