EuroFX trades below 1.3200 to lowest level since sept. 2013

Financials: Sept. Bonds are currently 6 higher at 140’20, 10 Yr. Notes1 higher at 125’30 and the 5 Yr. Note fractionally lower at 119’13.2. Last week we licked our wounds and took the loss on the long 10 Yr./short Bond spread in the 13’20 premium the Bonds.
The spread is currently trading at 14’22 premium the Bonds. Over the last few sessions the Bonds have rallied almost independently of short term treasuries as the 5 Yr. and Eurodollar futures actually traded lower. Meanwhile, in Europe, the ECB continued their talking points about the fear of deflation and continued quantitative easing in an effort to stimulate the economy which appears to be slowing (faltering?) given recent economic numbers. I’m still interested in Eurodollar spreads being long the nearby and short the deferred (such as June 2015/June 2017). To be honest I’m scared to be in Bond/10 Yr. Note spreads.

Grains: Dec. Corn is currently 3’0 lower at 368’4, Nov. beans 6’6 lower at 1034’4 and Dec. Wheat fractionally lower at 562’0. Corn and Wheat are starting show a bit of support and given the recent strength in Dollar I have to say they are holding up well. I’m will trade from the long side on sharp breaks. Beans on the other hand are on new recent lows and I’m staying on the sidelines.

Cattle: Friday’s Cattle on feed Report showed the following: The initial reaction to the Report is negative given the placement number was 2.0% above average trade estimates. Last week we recommended going long Oct. LC for short term trades below the 145.00 level and to go short above the 150.00.leve. The market gave several buying opportunities and closed out the week at 147.00. I’m now going to concentrate on the short side of the market above the 149.00 level if the market should trade higher.

Silver: Sept. Silver is currently 2 cents higher at 19.41 and Dec. Gold 1.00 lower at 1279.00. We remain long silver.

S&P's: Sept. S&P’s are currently 7.00 higher at 1994.75. If you are still holding the combination of short futures and short the Sept. 1990 put, cover the short put, currently trading in the 3.25 area, and look to go short a higher strike price on a sharp break. We are currently at a loss on this trade. One of the reasons that I have a negative bias on this market is the recent strength in the Dollar and the presumption made from recent Fed statements that rates could rise by June 2015. This market started it’s rally years ago when the Fed started easing causing a weakness in the Dollar as other economies sat on their hands and in some instances even raised rates further stregthening their individual currentcies against the Dollar. It seems to me that the tide has reversed as the Dollar strengthens and the talk is of higher rates in the not too distant future and other economies (Europe, Asia) now talk quantitiative easing and deflation. Stay tuned.

Currencies: As of this writing the Sept. Euro is currently 50 lower at 1.3193, the Swiss 22 lower at 1.0921, the Yen 11 lower at 0.9612 and the Pound 3 higher at 1.6577. We remain short the Euro and have reduced the size of the postion now that my first objective of 1.3200 has been reached. My next objective is the 1.2800 level. Either take profits or lower your buy stop to the 1.3360 level.