Fed starts 2 day FOMC meeting, Cattle prices drop

Financials: Dec. Bonds are currently 4 higher at 158’05, 10 Yr. Notes 3 higher at 128’22 and 5 Yr. Notes 2 higher at 120’14.7. The Fed starts there 2 day FOMC meeting today. It is expected that the will not be a rate hike given the recent edition of 190 billion Euro’s to the ECB’s stimulus program and 6th rate cut in China. That being said I still feel there will be a rate hike sometime between Dec. and Mar. We remain spread long June 2016/short June 2017 Eurodollars which is currently at a 6 point ($150) loss. If you are net short Eurodollars I recommend buying the June 2016 Eurodollars at 99.36 or lower to even out your spread position if given the opportunity. Last week we put on the long 5 Yr. note/short 10 Yr. Note in the 8’09-8’11 premium the 10 Yr. Note area. This spread has since traded as low as 8’00.5 and is currently at 8’06.5. I will take a profit on this position if it trades below 7’28.

Grains: Dedc. Corn is currently 1’0 lower at 383’4, Jan. Beans (time to switch from Nov.) 4’2 higher at 888’6 and Dec. Wheat 1’6 lower at 507’2. Nothing much to report here as harvest continues and Corn finds resistance above 395’0 and Beans find resistance above 905’0. Wheat staged a decent rally because of excess moisture due to current rain but failed to hold above the 510’0 level which would indicate a technical breakout to the upside should it close above said levels. I remain on the sidelines.

Cattle: Both Live and Feeder Cattle suffered triple digit losses after Friday’s Cattle on Feed Report. Other mitigating factors was the failure of cash market to hold the 140.00 level and renewed warnings of cancer risks from Red Meat.

If you remain short Dec. LC from the 142.25 level either take profits below 141.40 or use a protective buy stop just below your entry level. If the market trades below the 141.00 level, lower your buy stop to the 141.82 level. We remain short the Dec. LC 135/145 strangle.

Silver: Dec. Silver is currently 4 cents lower at 15.87 and Dec. Gold 1.00 lower at 1165.50. We remain long and still recommend taking partial profits on rallies to the 16.20 level in Silver and 1190.00 level in Gold.

S&P's: Dec. S&P’s are currently 3.00 lower at 2059.50. Treat as a trading affair between 2052.00 and 2071.00.

Currencies: As of this writing the Dec. Euro is currently 27 higher at 1.1080, the Yen 53 higher at 0.8319 and the Pound 4 lower at 1.5343. We were stopped out of the long Yen position when the market traded through the 0.8317 level late last week. I am on the sidelines.