Global Deflation, Greece (again!), Ebola etc

Global Deflation, Greece (again!), Ebola etc. all add to higher volatility resulting in lower equities & lower % rate yields.

Financials: Dec. Bonds are currently 21 higher at 145’02, 10 Yr. Notes 9 higher at 128’27 and 5 Yr. notes 2.5 higher 120’25.5. Yesterday was the most volatile day in recent history as the yield on the 30 Yr. Bond dropped temporarily below 3.00% and yield on the 10 Yr. dropped below 2.00% (the low I believe was 1.875%), conversely prices on these instruments rose dramatically with the 30 Yr. trading as much as 5’00 higher at the 148’00 level. We are coming in this morning short the 5 Yr. Note from above the 120’00 level and recommend either taking the loss or using a tight stop. Global deflation and slowing growth everywhere has put the market in “risk off mode” as investors head out of equities into the safety of treasuries. As for the long June 2015/short June 2017 Eurodollar spread: Yesterday we came into the office with the spread below the 162 level and initiated a small postion. The spread went immediately against us trading as low as 138.5 before returning to the 156 level. The spread is currently at 151. I feel long term the spread will work, that being said, at the moment I can’t define long term and I am willing to take the loss and head for the sidelines.

Grains: Dec. Corn is currently fractionally lower at 348’0, Nov. Beans 3’0 higher at 955’4 and Dec. Wheat fractionally higher at 506’4. These markets remain rangebound, putting me on the sidelines.

Cattle: Dec. LC are currently 50 higher at 163.00 and Nov. FC 100 lower at 162.97. We have taken profits on the long Jan/short Nov. FC spread. We continue to hold the combination of short the LCZ 162 put and short the LCZ 170 call. In an effort to make this trade even more complicated, I am hedging downside risk somewhat by doing the long 158 put/short 154 put spread at 70 points or better. FC continue to lose to LC.

Silver: Dec. Silver is currently 11 cents lower at 17.34 and Dec. Gold 5.00 lower at 1240.00. I still remain long Silver. I also like the long side of Gold on breaks. A close on Dec. GD above 1250.00 will be construed my many analysts as an upside breakout.

S&P's: Dec. S&P’s are currently 24.00 lower at 1822.50. Market volatilty remains high as the market trends lower approaching the a 10% decline from recent all time highs. The break was accelerated as the market broke through the 200 day moving average (1896.00) watched by many participants. For today I am watching the overnight range of 1815.25-1857.25 as an expected trading range. We came in this morning without any open positions.