The Russian attack on Ukraine roils the financial markets –Traders move to the safety of US treasuries
|Financials: June Bonds are currently 6 lower at 156’10 having traded as high as 159’00 just a couple of sessions ago. 10 Year Notes unchanged at 127’09 and 5 Year Notes about unchanged at 118’o5.75. The Russian attack on Ukraine has roiled the financial markets as traders of all stripes moved in herd like fashion to the safety of U. S. treasuries. This rally (and a consequential drop in yields) has negated the opinion that we could see a 0.5% rise in rates after the upcoming FMOC meeting. Fed Chairman Powell did indicate in testimony before the Congressional Baking Committee that he would be comfortable with a 0.25% increase and the market seems to agree as we saw a pop in yield yesterday as the market backed off 2’24 from recent highs on the 30 year Bond. Support for June Bonds is currently 154’08 and resistance 158’24.
Grains: May Corn is currently 5’0 higher and Beans 18’2 higher at 1681’2. Since my last “Report” on Feb. 17 March Corn is up about 100’0 and March Beans 90”0 higher as the market tries to deal with sanctions against Russia and worries about Global Supply Disruption. In this same period March Wheat is up nearly 300’0 and is called sharply higher. I anticipate continued high volatility as the market reacts either way (up or down) to news headlines re: Russia/Ukraine. For the moment I am interested in watching the spread between 0ld crop/ new crop such as May /Dec. Corn and anticipate an eventual narrowing of the spread (Dec. gaining on May) once the market settles down and the Russia/Ukraine situation stops being font page news. I don’t mean to make light of this very serious situation and my heart goes out to the Ukraine, I am just trying to anticipate market trends.
Cattle: Apr. LC are 57 lower this morning at 139.52 and Apr. FC127 lower at 161.72 I still expect the long LC/short FC spread to narrow as the Feeders shun the high cost of feed. Several months from now I suspect we will experience higher Live Cattle prices as a result of this.” Low prices cure Low prices”
Silver: May Silver is currently 13 cents higher at 25.32. The near term trend has turned up, but, long term trend remains. My observation is that Silver has benefitted from a perceived flight to safety. Sup-port is currently24.60 and resistance 26.05
S&P 500: March S&P’s are 18.00 higher at 4400.00. The market over the last week broke to a low of 4101.00 on the initial news of Russian invasion of Ukraine only to rally to current levels on speculation that we will not see a 50 basis point rise in interest rates this month. Support is currently4150.00 and resistance 4425.00.
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