Interest rates have been climbing as a stronger U.S. economy and the recent election give markets confidence that the Federal Reserve will raise interest rates at its next meeting in December.
The Fed has raised rates only once in the last decade and traders have prematurely called for impending raises, but they are growing increasingly confident that short-term rates could jump to 0.75 percent next month.
Long-term interest rates have been climbing as well. The 10-Year US Treasury Note, which is a closely followed proxy for mortgage rates, has risen massively from 1.8 to 2.3 percent so far this month.
Higher rates hurt future borrowers but help savers, who could soon start seeing noteworthy interest payments on deposits. The prospect of rising U.S. interest rates also makes investments in the United States more attractive to foreign investors, boosting the value of the U.S. dollar to the highest level in over 13 years.
A stronger dollar makes foreign goods cheaper, but also hurts U.S. companies' and farmers' ability to export goods to other countries.
Metals Rattle Lower
As interest rates, the stock market and the U.S. dollar are rising, precious metals have lost their luster. Gold, silver and platinum are all falling to the lowest levels in nearly six months as investors flock toward other assets.
To some, this trend will continue, while others see $1,200 gold, $16 silver, and $900 platinum as attractive buying prices.
Cattle Roar to Life
Cattle prices are rebounding from a six-year low, regaining 12 percent over the last month.
Trading Friday near $1.08 per pound, prices have been climbing amidst general economic optimism. When consumers feel wealthier, they are more likely to spend money on steaks, which boosts demand. Meanwhile, meatpackers have been paying more for slaughter-ready animals, another signal that they are expecting a firmer beef market in coming weeks.
But, even as the market pushed into two-month highs on Friday, market participants were wary due to an impending Cattle on Feed Report.
The USDA's monthly tally of the U.S. herd size was released after the market closed (and after our press deadline), giving everyone a weekend to sweat through until they could act on the data Monday morning. The report is expected to show the total number of cattle on feed to be 99 percent of last year's level.
Opinions are solely the writers'. Walt and Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, Kan. They can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.