Financials: Sept. Bonds are currently 30 higher at 130'23. Yesterday the Fed left rates unchanged but indicated that they will be buyers of long term instruments (5 yr., 10 yr., etc.) in an effort to keep longer term rates low. The long 10 Yr. Note/ short 30 Yr. Bond spread is now trading at 5'06 premium the Bonds, the recent high on this spread being 5'15 premium the Bonds. Yields on the 2 Yr. Note and 5 Yr. Note remain at historic lows. The 10 Yr. Note is now under 2.75% and the 30 Yr. just under 4%. I remain on the sidelines awaiting opportunity.
Grains: Yesterday Nov. Beans closed 13 cents lower, Dec. Corn 9 lower and Dec. Wheat 17 lower. Over night Beans were fractionally higher, Corn fractionally lower and Wheat 2 higher. The average estimates for tomorrows Crop Production Report are as follows: Corn 3.282 billion bushels with a yield of 164.1 bushels per acre. Beans 3.366 billion bushels with an average yield of 42.9 bushels per acre. Analysts also predict an increase in demand. The chink in all these numbers will be the Russian and Chinese crops, if the damage is as severe to Russian crops as the news has led us to believe, export demand should increase and prices should be headed higher. I recommend being long out of the money calls as opposed to futures at this time because of the safety from unlimited loss and extreme volatility.
Cattle: Yesterday Live Cattle closed 30 higher to 30 lower and Feeder Cattle slightly higher to 30 lower depending on the contract month. Tomorrow's grain report should give an indication for the direction of feed grain prices which will have an effect on Cattle and especially Feeder Cattle. We remain on the sidelines.
Silver: Sept. Silver is currently 8 cents lower at 18.08. Yesterday the market rallied from 15 cents lower to 15 cents higher after the FOMC comments only to fall back to current levels. I still need to see the market either close above 18.50 or trade below the 17.50 level before I am interested in a futures position. We remain long the Dec. Silver 20/22 call spread.
S&P's: Sept. S&P's are currently 23.00 lower at 1097.00. We remain short the Sept. 1140 calls. The market has now broken out to the downside from its recent sideways trend of 1104.00-1129.00. Support is currently 1086.00 and resistance 1112.00. I recommend the short side of the market on rallies by either selling futures, selling calls or buying out of the money puts.
Currencies: As of this writing the Sept. Euro is 231 lower at 1.2966, the Swiss 27 lower at .9517, the Yen 51 higher at 1.1779 and the Pound 190 lower at 1.5685. No question that the Euro and Pound have rolled over to the downside. I'm hesitant to go short at present levels, but will look at out of the money put spreads on the Dec. contract. Support for the Sept. Euro is currently the 1.2800 level and resistance 1.3130 (quite a wide range). Of note: the Yen is currently on a 15 year high. The Sept. Dollar Index is currently 1.10 higher at 82.02.
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