Financials: Sept. Bonds are currently steady at 124'09. As mentioned yesterday, I am hestitant to recommend a naked position in the Bonds at this time because of the fear factor of further soveriegn debt revelations. That being said I do lean towards the short side of the market. I feel comfortable being spread long 10 Yr. Notes/ short Bonds or a combination of short Bonds and short out of the money puts (preferably below the 120'00 strike price on the Sept. contract).
Keep in mind that niether of these strategies will limit a loss to a specific amount, only have less of a loss or profit potential than a naked Bond position. For the near term support is currrently 123'06 and resistance 124'31.
Grains: Yesterday Beans were unchanged, Corn 4 cents lower and Wheat 3 lower. Over night Beans were fractionally higher, Corn fractionally lower and Wheat 1 higher. We remain long out of the money call spreads in Nov. Beans and short the Sept. Corn 340'0/420'0 strangle. I feel that the Dollar is near a short term top and this could have a positve near term effect in Grains.
Cattle: Yesterday Live Cattle 75-115 lower depending on the contract month and Feeder Cattle moderately lower. I feel that Aug, Live Cattle is currently in support and recommend the long side of the market by either going long futures, long out of the money calls or short out of the money puts. Producers who are holding long puts that are now more than 2 or 3 strike prices in the money should consider rolling their position into a lower strike price.