Futures Markets: Rate Contracts Fall As Concern Grows About Inflation
Major interest-rate futures prices tumbled as the recent weakening of the U.S. dollar fostered rising fears of inflation.</br></br>After the futures markets closed, prices for U.S. government notes and bonds continued to decline on cash markets in response to a report of a larger-than-expected rise in the nation's basic money supply during the week ended July 1. The report, released after futures-trading ended, dispelled hopes of any easing of credit by the Federal Reserve System.</br></br>Futures traders and analysts viewed yesterday's declines in Treasury bond, Treasury bill and Eurodollar contracts as a potentially significant reversal.</br></br>"It was a day of carnage," said Norman Frey, an analyst at Northern Futures Corp., Chicago. "The market has turned distinctly bearish."</br></br>Economic crosscurrents swept the futures markets yesterday, however. Although foreign-currency futures mostly continued to rise for the seventh consecutive trading session, nonfinancial commodity futures generally declined, according to an index compiled by the Commodity Research Bureau, which fell to 226.4 from 228 the previous day. Theoretically, a dollar decline would tend to bolster commodity prices by increasing demand for commodities priced in dollars and discouraging competing imports.