With one of the worst droughts in US history finally abating, the grim realization that the rain will come too late for US crops is setting in. The UD Department of Agriculture lowered its forecast for US corn and soybean production by 17 percent from a month ago to 13 billion bushels. It was the second month in a row the USDA lowered its forecast, the new expected total would be 13 percent below last year's haul. Corn prices rose to a record high on the dour outlook from the agency, but then retreated after it said demand would likely fall because of soaring costs.
A disappointing auction for Italian bonds on Thursday drove the yield for those bonds above the troublesome 7 percent level. In its last auction of the year, the Italian government sold just over 7 billion euros, or about $9 billion, of ten-year bonds, falling short of the high end of the offering range of 5 billion to 8.5 billion euros worth. The yield on the note edged up from just under 7 percent on Wednesday to 7.07% on the day of the auction. While not quite as high as the 7.56% rate Italian bonds hit last month, any yield above 7 percent is considered dangerous by economists and investors alike.
Goldman Sachs has been named in a new lawsuit from an Australian hedge fund that accuses the iconic Wall Street bank of selling it bad securities and then profiting be betting the securities would fail. The lawsuit, filed by the Basis Yield Alpha Fund, alleges fraud, breach of contract and negligence, and seeks to recoup $67 million in losses plus a staggering $1 billion in punitive damages.
U.S. Treasuries rose Tuesday for the first time in three days as investors concerned about Japan's ongoing nuclear crisis drove demand at an auction for $32 billion worth of three-year notes. The notes drew a yield of 1.28 percent, compared to the average estimate of economists in a Bloomberg survey, who had forecast the notes would yield 1.293 percent. The bid-to-cover ratio, which basically measures demand by comparing total bids with the amount of securities up for auction, was 3.25, surpassing the average of the previous ten sales, 3.14.