Portuguese Bank Concerns, Mid-East Tensions push Bonds, Gold, Silver High, S&P sharply Lower

Financials: Sept. Bonds are currently 24 higher at 137’22, 10 Year Notes 15 higher at 125’14 and 5 Yr. Notes 10.5 higher at 119’15.5. Eurodollar futures are 2-8 higher with deferred contracts out pacing nearby contracts. Concerns over a possible failure of Portugal’s Banco Espirito Santo and renewed Mid-East tensions have pushed these markets higher this morning. Earlier in the week we were sellers in Sept. Bonds in the 136’18 area for short term trades and took a small loss. As has been noted over the last several weeks we have been watching the long June 2015/short June 2017 Eurodollar futures spread for an opportunity below the 185 premium the 2015, the spread is currently at 184.5. I am looking to put this on somewhere between 175-185.

Grains: Dec. Corn is currently fractionally higher at 398’6, Nov. Beans 6’4 higher at 1110’2 and Dec. Wheat 3’4 higher at 578’4. We tried the long side in Nov. Beans only to be stopped out yesterday when they traded through the 1108’0 level. We are currently long Dec. Wheat with a protective sell stop at 565’0. We are also willing to once again try the long side of Dec. Corn with a 10 cent risk for a short term trade now that the 400’0 level has been penetrated confirming many analysts downside objective of 400’0.

Cattle: Aug. LC are currently 60 lower at 150.20 and Aug. FC 167 lower at 211.92 after closing sharply lower yesterday and now more than 500 points off recently made contract highs. We remain long out of the money puts. If the Aug. LC 142.00 put should trade above the 80 point level in the next few sessions, take profits.

Silver: Sept. Silver is currently 43 cents higher at 21.50 and Aug. Gold 17.00 at 1341.00 over European banking concerns and mid-east tensions, both trading on new recent highs. We remain long Silver and continue to trade Gold from the long side on sharp breaks.

S&P's: Sept. S&P’s are currently 20.00 lower at 1947.25 for all the same reasons that Gold, Silver and Bonds are higher. We continue to hold the combination of short futures and short the Sept. 1900 put.

Currencies: As of this writing the Sept. Euro is currently 39 lower at 1.3611, the Swiss 16 lower at 1.1217, the Yen 40 higher at 0.9891 and the Pound 40 lower at 1.7109. We continue to hold a short bias (either long puts, short calls or short futures) in the Euro.