Financials: Dec. Bonds are currently 1'10 lower at 141'20 and the 10 Yr. Note 17 lower at 129'26. The long 10 Yr. Note/ short Bond spread is at 11'23 premium the Bonds. Over the last couple of days Greece, et al, seem to be starting to handle their debt problems with the enforcement of austerity measures. French and German banks are starting to talk about 50% write downs of the sovereign debt they are holding and also talking about re-capitalizing. This has removed a bit of the fear premium in the Bonds. All I can say is wait and see. I am overall a bit negative the interest rate complex, but won't sell at current prices. As mentioned yesterday, I will be looking to trade from the short side on sharp rallies now that the market has established a top in the 147'00 area.
Grains: Yesterday beans closed 1'6 higher, Corn 9 higher at Wheat 7 higher. Over night Beans were 14 higher, Corn 14 higher and Wheat 14 higher. An easing of Global economic fear has brought these markets back from an oversold position. We remain long out of the money calls and/or call spreads in Dec. Corn. There will be a Grain Stocks Report Friday morning (Sept. 30) at 7:30a.m. Chicago time.
Cattle: Yesterday Live and Feeder Cattle closed sharply higher to limit up in response to Friday's bullish Cattle on Feed Report. I am still interested in the short side of Dec. Live Cattle above the 122.00 level if the market allows.
Silver: Dec. Silver is currently 2.59 higher at 32.57. We continue to hold a small long position which is currently against us. If you are long term bullish this market consider out of the money calls and/or call spreads because of the limited risk.
S&P's: Dec. S&P's are currently 21.00 higher at 1179.50. The market is rallying on an easing of Global Economic Fears (see Financials comments). Yesterday the market rallied through resistance of 1146.00. Near term support is currently 1156.00 and resistance is now 1183.00. I once again favor the short side of the market.
Currencies: As of this writing the Dec. Euro is currently 165 higher at 1.3625, the Swiss 128 higher at 1.1189, the Yen 12 lower at 1.3078 and the Pound 148 higher at 1.5659. I am on the sidelines with the exception of being long the Oct. Yen 1.2400 put which expires Oct. 7th. This will be my last letter until Oct. 4th.
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