Financials: Bonds are currently 20 higher at 125'21, the 10 Yr. Notes 11 higher, the 5 Yr. Notes 2 higher and the 2 Yr. Notes 1 higher at 108'25. The Dec. Eurodollars are currently unchanged at 98.775. The market is still experiencing a bit of a flight to quality, but not the degree it has seen in months past given that Bonds are trading around 126'00 and not 130'00. This morning there are also concerns that Citibank and Bank of America may need to raise to more capital to satisfy “stress tests”. We remain short the 2 Yr. Notes and Dec. Eurodollars. I still like the short side of the short end of the yield curve feeling that the downside of short term interest rates is limited, i.e., interest rates are so low that the surprises will be on the upside. As interest rates go higher, the price of the instrument goes lower.
Grains: Yesterday Beans were 35 cents lower, Corn 4 lower and Wheat 24 lower. Over night Beans were 9 higher, Corn 2 lower and Wheat 5 higher. We were stopped out of remaining long Wheat positions when the July contract traded below the 521'0 level. Yesterday the Grains and most other commodities broke sharply on the Swine Flu news. I haven't quite reconciled in my mind why this should have a long term negative effect, but I'm willing to respect the action enough to stand aside for a day. We do however, remain long out of the money calls and/or call spreads in July Corn.
Cattle: Yesterday Live Cattle closed 67-80 lower with the June contract closing 80 lower at 81.80. The June contract actually traded as low as 81.10 early in session as Cattle opened sharply lower along with most other commodities. I remain on the sidelines waiting to see if the market shows signs of support at current levels before venturing in on the long side of the market.
Silver: July Silver is currently 60 cents lower at 12.38. If you remain long continue to use a protective sell stop at 12.23. I will be willing to enter the market again on the long side on a break to the 11.85 level.
S&P's: June S&P's are currently 11.50 lower at 845.25. Yesterday the market rallied of its early morning lows to about unchanged, triggering my recommended buy stop at the 861.00 level for remaining short positions. The idea that both Citibank and B of A may need more capital has put early pressure on the futures market. I must say that things are once again looking negative. Near term support is currently the 826.00-832.00 level. Resistance is currently 854.00. I prefer the short side of the market on rallies.
Currencies: As of this writing the Euro is 38 higher at 1.3057, the Swiss 28 higher, the Yen 72 higher and the Pound 43 higher at 1.4679. The June Dollar Index is currently 28 lower at 85.64. I will be looking to the long side of the Euro currency on a break below 1.2900.