Argentina defaults. Bonds, equities, gold, eurofx all lower

Financials: Sept. Bonds are currently 28 lower at 136’20, 10 Yr. Notes 10 lower at 124’11 and 5 Yr. Notes 5 lower at 118’21. Weekly Jobless Claims this morning were in the range of expectations being up by 23,000. Yesterday the FOMC left rates unchanged, continued paring the monthly purchase of Bonds and mortgage backed securities by 10 billion and signaled an end to quantitative easing down the road. We remain spread long 10 Yr. Notes/short Bonds which is finally a few ticks our way trading at 12’08 premium the Bonds. Yesterday’s support level of 137’18 in the Bonds has been handily broken. Of note: Argentina defaults for the second time in 13 years.

Grains: Dec. Corn is currently 2’0 lower at 369’4, Nov. Beans 3’0 lower at 1078’2 and Dec. Wheat 1’6 lower at 547’6. We remain long Dec. Corn with a protective sell stop at 363’2.

Cattle: Aug LC are currently 10 higher at 159.95 and Aug. FC 47 higher at 223.50. We have bought the Oct. LC 144 puts for 35 points. Next week we will be quoting Oct. contracts.

Silver: Sept. Silver is currently 4 cents higher at 20.64 and Dec. Gold 8.00 lower at 1289.00. We remain long Silver. We have been stopped out of recent longs in Dec. Gold as the market traded through our recommended sell stop of 1294.00 (see “Report” 7/30/2014).

S&P's: Sept. S&P’s are currently 16.50 lower at 1948.50 as the market reacts to Argentinian default and increased military action in Gaza. We continue to recommend holding the combination of short futures and short the Sept. 1900 put.

Currencies: As of this writing the Sept. Euro is 8 lower at 1.3385, the Swiss 1 lower at 1.1003, the Yen 4 lower at 0.9719 and the Pound 50 lower at 1.6859. We remain short the Euro and will start contemplating an exit and profit taking strategy next week. If you have been trading the Pound from the short side on rallies I recommend covering short positions and standing aside for the moment.