September Crude Oil Futures (cl02u) $29.95 +0.2% traded the $30/barrel mark this morning after reports that an Iraqi dissident group said it occupied the Iraqi Embassy in Berlin and called for the overthrow of Saddam Hussein. "We are taking over the Iraqi Embassy in Berlin and thereby taking the first step toward the liberation of our beloved fatherland," the group said.
The group, which calls itself the Democratic Iraqi Opposition of Germany, says its action is "peaceful and limited in time." The embassy incident came as Germany has come out in opposition of any U.S. military action against Iraq to remove Saddam Hussein.
The move higher in crude oil has had little impact on the stock- related energy sectors as the CBOE Oil Index (OIX.X) 285.82 -1.72% and Oil Service Index (OSX.X) 84.28 -2.3% both trade lower. The more "domestic" related Natural Gas Index (XNG.X) 137.83 -.074% also edges lower.
Treasuries are finding buying this morning across the major maturities with the shorter-term 13-week YIELD ($IRX.X) 1.587% and 5-year YIELD ($FVX.X) 3.306% seeing YIELD fall from buying in the underlying Treasury bonds.
The U.S. Dollar as depicted by the U.S. Dollar Index (dx00y) 107.62 +0.06 trades firm to marginally higher, but did trade back a bit after news of the Iraqi Embassy siege.
Bond and currency market action may also be driven by this morning's June trade deficit numbers which showed the balance in goods and services trade for the United States showed a slightly smaller $37.2 billion deficit in June, driven in part by a weaker U.S $ in the first-half of the year.
The trade gap was marginally slimmer, 1.8 percent, than the revised record $37.8 billion deficit reported in May, mostly because of export growth found in May.
Imports reached $119.2 billion, which still outstripped $82 billion in exports that month. Imports have increased for six month in a row, partly reflecting stronger consumer demand for overseas products as the economy stages a modest recovery.
Exports increased in June for a fourth consecutive month, hinting a global economic recovery continues, while a weaker U.S. dollar makes for more competitive U.S. exports and pricing advantage in overseas markets.
The numbers did get some slightly bullish comments from economists citing; higher imports indicate consumer confidence - more importantly consumer spending - is returning to stronger levels, while improved exports should aid a manufacturing recovery and help boost quarterly gross domestic product (GDP).
At the 11:00 hours, breadth is negative at both the NYSE and NASDAQ with decliners outnumber advancers by an 8 to 5 margin on the big board, while decliners outnumber advancers by a narrower 4 to 3 margin at the NASDAQ.
New highs versus new lows continues to narrow at both the NYSE and NASDAQ. The big board shows 13 stocks hitting new highs versus 13 stock achieving new lows, while NASDAQ starts to narrow a bit with 52 stocks hitting new lows versus 20 stocks achieving new 52-week highs.