T-Bond Futures Close Up
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Treasury bond futures took a beating from stronger oil prices early Wednesday, then closed higher as the oil gains withered.
Much of the volatility was attributed to comments from the White House.
Oil futures on the New York Mercantile Exchange opened higher on follow through buying from Tuesday when Vice President George Bush said he will tell Saudi Arabia during a trip to the Middle East that crude oil prices have dropped far enough.
The collapse in oil prices has brought the inflation rate close to zero, sending Treasury bond futures soaring to record highs this week.
Traders assumed from Bush’s comments that the United States would begin working to limit worldwide production of oil, which would lead to higher prices. Oil futures advanced strongly on this assumption; treasury bond futures slumped on the Chicago Board of Trade.
But when White House spokesman Larry Speakes told reporters Wednesday that Bush’s remarks were misinterpreted and that the Administration still favors market control of prices, oil futures retreated and T-bonds recovered.
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