The yield curve continues to flatten as interest rates move slightly higher
|Financials: Mar. Bonds are currently 16 higher at 161’10, 10 Year Notes 6 higher at 130’12.5 and 5 Yr. Notes 1.5 higher at 120’27. Quite a volatile week as the market bounced between support of 160’00 and resistance of 164’00 as traders absorbed the latest news on covid-19 variables such as Omicron which is apparently more contagious but less severe symptomatically than the Delta variation. Add to this increasing tensions with Russia and China and you have plenty of grist for volatility. Support remains at 160’00 and resistance at 164’00 at the moment. As for yields, the yield curve continues to flatten as interest rates moved slightly higher for the week in favor of the 2 and 5 years over the 10 and 30 years. Conventional wisdom now expects the Fed to comment on when rates will rise and how many increases between 2022 and 2024 at the next FOMC meeting. Currently, the 2 Year yield is 0.67%, the 5 Year 1.24%, the 10 Year 1.48% and the 30 Year 1.87%.
Grains: Mar. Corn is 1’0 lower at 586’0 and Mar. Beans7’0 lower at 1262”0. Trends remain down on Beans and sideways on Corn. Support on Mar. Corn remains at 571’0 and resistance at 595’0. Support on Mar. Beans are currently 1226’0 and resistance at 1276’0. USDA report later this morning.
Cattle: Feb. LC is 12 higher at 138.80. I feel that meatpackers are overbought for Holiday season and this could result in near term backing up of marketings’. For the moment support in Feb. LC is 137.50 and resistance 139.65.
Silver: Mar. Silver is 44 cents lower trading below 22.00 at 21.98. The trend remains down with long-term support just under 20.00. As I have been stating the last few months this market is highly volatile, but, I think we will start to see a decline in volatility as this market starts to near long-term support.
S&P: Dec. S&P’s are 8.00 lower at 4691.00. The market held last week's stated support of 4475.00 and broke out to the upside as the fear of renewed Covid related lockdown abated. Support for the sort term is currently 4636.00 and resistance is at 4713.00. Next week we will be quoting the March contract which is 7.00 discount to the Dec.
Currency: The Dollar Index is up 25 points at 96.140. Trend remains up but I want to note that this market failed at the 95.60-95.80 area. Support is 95.40, resistance remains above 96.50. If support is penetrated it will give me a reason to start watching other major currencies such as the Euro, Pound and Yen.
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