Fed leaves rates unchanged, does not rule out March rate hike

Financials: Mar. Bonds are currently unchanged at 160’00, 10 Yr. Notes 1 higher at 128’28.5 and 5 Yr. Notes 1.2 higher at 120’08.5. The FOMC left rates unchanged and did not rule out a rate hike in March citing concern about the current economic outlook. Inflation is expected to remain low for the near term due to energy prices, longer term, inflation is expected near the 2% target. Of note: The Fed deleted “reasonably confident” language from policy guidance. All in all, “much ado about nothing” Market reaction was a rally in treasuries and a break in equities demonstrating how the market dislikes uncertainity. The “ market” I feel would have preferred more difinitive comments about the circumstances required for a rate hike. I am still on the sidelines treating the 10 Yr. Note as a trading affair between 127’22 and 129’14.

Grains: Mar. Corn is currently 1’0 lower at 368’2, Mar. Beans 1’2 lower at 881’6, Mar. Chi. Wheat 1’4 lower at 475’0 and Mar. KC Wheat 0’2 lower at 467’2. We remain spread long KC/short Chi. Wheat. I will be a buyer in Mar. Corn on a 10 cent break or a close above 375’0.

Cattle: Live Cattle closed sharply higher on nearby contracts and moderatelt higher on deferred months. Feeders just the opposite with deferreds gaining on nearby’s. Yesterday we went long Aug./short Apr. Live Cattle at 13.95 premium the Apr., currently losing 55 points. My objective for this spread is currently 13.10 premium the Apr. I am willing to go long Apr. in the 126.00 area and short Apr. in the 138.00 area.

Silver: Mar. Silver is currently 5 cents lower at 14.41 and Apr. Gold 3.00 higher at 1119.00. I have mentioned in previous “reports” that these metals may be breaking out to the upside. If Silver stays above the 14.26 level on a closing basis and Gold above 1105.00 on a closing basis we may have confirmation. We remain long a swmall position awaiting a reason to add. Stay tuned.

S&P's: Mar. S&P’s are currently 4.50 higher at 1879.50 after an active overnight session which saw a low of 1866.25 and a high of 1895.75 as the market gyrated in step with a volatile Oil market. I am still retaining a negative bias. If you went short in the resistance area of 1895-1905.00 area either take profits or use a protective stop at break even levels. Should the market trade below 1873.00, lower your stop by 5.00-7.00 points or take profits. Support remains in the 1840.00’s.

Currencies: As of this writing the Mar. Euro is currently 2 higher at 1.09195, the Yen 15 lower at 0.84175, the Pound 72 higher at 1.4322 and the Dollar Index 7 lower at 98.875. We remain short the Dollar Index and continue to hold long biased positions in the Yen. A close below the 98.38 level in the Dollar Index will give a bit more credence to our position.