Dramatic price actions in NY session caught everyone in surprise. Selloff in crude oil price accelerated after poor durable goods orders and new home sales data. The front-month contract then tumbled to an 11-week low of 70.76 after oil and petroleum inventories surged to record highs. Price then rebounded, erasing losses made earlier and halting the 5-day decline, to 72.52, up +1.24% at close. The reversal was in synchronization with Wall Street which jumped after positive corporate news. Trading was thin yesterday and we believe the reversals were drive by squaring of positions instead of a shift of market sentiment.

The Commerce Department reported that durable goods orders climbed +0.3% m/m in July while the market had anticipated a +3% gain. Excluding transportation, the reading surprisingly slumped -3.8%, compared with consensus of a +0.5% increased. In another report, new home sales declined -12.4% to a record low of 276K in July. The lack of demand for new homes, coming against the backdrop of multi-year low home price, evidenced weak employment situation has been dampening consumer confidence.

The dataflow was by all mean disappointing and sent the DJIA below to as low as 9938 at one point. However, the decline attracted bargain-hunting and investors took the stronger-than-expected earnings result from Toll Brothers as reasons to send stocks higher. The largest US luxury homebuilder reported its first quarterly profit since 2007 in the fiscal 3rd quarter. The company earned $27.3M during the period, compared with a loss of $472.3M the same period last year. DJIA and S&P ended at with gains of +0.2% and +0.33% respectively.

Gold soared on intensified macroeconomic uncertainty and renewed worries about sovereign crisis in peripheral European countries. The benchmark contract rose for a second straight day and settled at 1241.3, up +0.64%. Peripheral debt spreads widened further after S&P downgrading Ireland’s rating to AA-. The 10-year Irish-German debt spread widened to 3.59%, the highest level since 1988, while that for Greek-German debt widened to 9.48%, the highest level since May 7, even after the Finance Minister stressed that the county’s economy will no contract by more than -4% despite austere fiscal consolidative measures.

Focus of the day is on the weekly US initial jobless claims which probably slipped to 485K in the week ended August 21. The reading in the previous week unexpectedly hit 500K for the first time since November.