REVIEW

There were few fireworks before Thursday's session with unrevised GDP data leaving a moribund sensation of "what next?" The slight dip in weekly jobless claims was equally uninspiring and for choice left equity traders leaning on prices to see what might transpire. Would this little nudge be enough to cause more investors to bail before the month end?

Apparently not. The Dow industrial average rose 37 points for an eighth consecutive string of up-days. According to the Wall Street Journal, that is the first occurrence in 24 months. It must be the bears that are holidaying in the Hamptons this year!

Cash markets have been slowly thawing and Libor rates have continued to fall. So in the last few sessions, as cash yields have fallen in price Eurodollar interest rate futures have rallied right up to the top of their recent range, hinting that any day now a surge might follow. 

The rationale is that investors have grown increasingly aware that the Fed might be on hold for longer. As cash rates trickle lower, there is an automatic bid higher for futures because they are inherently discounting interest rate rises across time. As investors are creeping towards that feeling of inaction at the Fed, the appeal of Eurodollar futures becomes greater.

Treasuries also came through an auction of $28 billion seven-year notes with a vote of confidence from investors. The total auction process this week will exceed $100 billion. Ten year notes closed largely unchanged at around 3.45%.

Commodity prices swooned before rising. As ever, markets tend to lunge as they throw most people off the rollercoaster, before screaming ever-higher. Today was precisely one of those days. Crude oil prices for October fell to a five-day low, ejecting the lightweight longs on the way, before closing higher on the session.

A Goldman Sachs upgrade for the prospects for coal and cement prices coincided with the dollar's failure to breach its 20-day moving. Its failure to eek out further gains this week against the euro and the yen created waves of selling and its price back to the weakest levels of this week.

Commodity traders welcomed such a swoon in the dollar and it acted as a springboard for raw material prices after a pretty weak environment.

Friday looks like it might be another bullish day all round leading to a positive close for the week. That would keep us all happy as we head for September and some return of serious money into the market.

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