Treasuries rally, Equities drop as European and Asian markets decline

Financials: June Bonds are currently 1’07 higher at 165’28, 10 Yr. Notes 13 higher at 130’28, 5 Yr. Notes 7.2 higher at 121’11 and June 2017 Eurodollars 3 higher at 99.09.
Overnight the June 2017 Eurodollars met our objective of 99.10 and we were able to establish a short position at said price. My thinking for this position is that even though many analysts have discounted the amount of rate hikes for 2016 from 3 to just one, I have established this position in 2nd quarter 2017 with the expectation that there will be more than 1 rate hike over the next 14 months. The current lead month in Eurodollars being April 2016 is trading at 99.37. Doing some basic math, 2 rate hikes of 25 bsis points will put the market in the 98.87 area. Certainly this will not be a homerun, but I feel this position will at some time yield us a 15-25 point profit.

Grains: May Corn is currently 1’2 lower at 355’6, Beans fractionally lower at 913’2 and Wheat 2’6 lower at 472’0. I am still on the sidelines but will be willing to go long Corn 12 cents below the market and Beans 20 cents below the market. You might also consider going long out of the money new crop calls in Beans on a sharp set back.

Cattle: Live and Feeder Cattle settled slightly lower with June LC at 123.375 and May FC at 154.35. I still remain overall neutral to Feeders but feel we are near a bottom in Live Cattle. I will be a buyer in June n the 121.00 area and/or a buyer in Aug. below 117.65. We have taken profit on all short Apr./long deferred spreads.

Silver: May Silver is currently 21 cents higher at 15.16 and June Gold 14.50 higher at 1234.00. We remain long.

S&P's: June S&P’s are currently 14.50 lower at 2043.00. Recents declines in Energy, oil is below 36.00 down from recent highs of 40+, expectations of fewer rate hikes, Friday’s bump upwards in the unemployment rate from 4.9% to 5.0%, a downturn in global markets and expectations of disappointing 1st quarter corporate earnings could be the beginning of the “perfect storm”.I am once again selling rallies and/or buying puts or selling calls. A close above 2072.00 will negate my thinking and a close below will confirm.

Currencies: As of this writing the June Euro is currently 25 lower at 1.1395, the Yen 52 higher at 0.9070, the Pound 10 lower at 1.4182 and the Dollar Index 21 higher at 94.73. I remain overall bearish the Dollar inspite of being on the sidelines recently. I will go short the Dollar Index once again should it rally above the 96.00 level in the next few sessions.