FOMC Meeting Today: Lift Off?

Financials: Dec. Bonds are currently 9 lower at 154’14, 10 Yr. Notes 4 lower at 125’31.5 and 5 Yr. Notes 2 lower at 118’18. If you shed the extra long 5 Yr. Note from the ratio spread of long 3-5 Yr./short 2-10 Yr. Notes I recommend covering 1 of the remaining long 5 Yr./short 10 Yr. spreads this morning before the Fed announcement at 1:00pm. If you kept the entire ratio spread look for a profit taking opportunity should the market break sharply after the FOMC. I feel that there will be a 25 basis point hike and this will be because of increased GNP and job creation. That being said I feel that further hikes down the road will be dependant on inflation rising over 2.5%.

Grains: Dec. Corn is currently 1’0 lower at 376’2, Jan. Beans unchanged at 867’2 and Mar. Wheat 0’4 higher at 496’6. We remain long Mar. Corn with a protective sell stop at 369’0. The KC/Chi. Wheat spread has moved a bit our way over the last two sessions currently trading at 2’0 premium Chicago. My objective remains at 8’0 premium KC.

Cattle: We remain long Feb. LC and on the sidelines in Feeders. We have taken profits on the long Apr. LC/short June LC spread.

Silver: Mar. Silver is currently 8 cents higher at 13.85 and Feb. Gold 4.00 higher at 1065.40. We remain long. Today could get quite volatile around Fed time.

S&P's: Mar. S&P’s are currently 7.50 higher at 2044.50. I am long the Dec. 2020 put going into the FOMC. For short term trading after the Fed announcement I will be a buyer under 2015.00 and a seller over 2070.00.

Currencies: As of this writing the Mar. Euro is currently 4 higher at 1.0950, the Yen 6 lower at 0.82275 and the Pound 38 lower at 1.5004. We were stopped out with a profit on long Yen positions when the market traded through the 0.8260 level. I am watching the Pound and contemplating the long side on breaks, but not quite ready to pull the trigger so to speak.