Financials: Sept. Bonds are currently 20 higher at 143’07, 10 Yr. Notes 6.5 higher at 119’12.5 and 5 Yr. Notes 3 higher at 113’04.7. Yesterday, as expected, the FOMC raised rates 25 basis points (1/4%). What was a bit unexpected was the indication in their comments that there could be 4 rate hikes in 2018 as opposed to language in previous statements that the likelihood of rate hikes will probably be limited to 3 this year. The early reaction was to the downside on both long and short term treasuries of which the market has fully recovered and are now just above pre-report levels. For the moment we are staying with the Sept. 10 Yr. Note position of long the 117’00 put purchased during the last week at 12/64ths or better (currently at 11).
Grains: July Corn is 3’6 lower at 372’4, Beans 3’2 lower at 932’6 and Wheat 8’0 lower at 508’4. During the last week these markets have had a dramatic sell off as weather has improved growing conditions (rain makes grain). Also overhanging the market is the onus of a trade war and the threat of tariffs on grain. Being a contrarian, I am buying the break in Corn and Beans in expectation of a short term bottom with a risk limit of 10 cents in Corn and 25 cents in Beans.
Cattle: Live and Feeder Cattle made new near term highs early in the week only to give up those gains mid week. The cash market has been relatively stable in the 113.00 area, that being said it is expected that marketing’s could increase substantially as the month progresses as evidenced by the 3.00-5.00 discount to cash by the June LC futures. We have initiated a short position in the 108.00-11.00 area. If the market trades below 106.50 either take profits or enter a close stop.
Silver: July Silver is currently 16 cents higher at 17.50. I remain long.
S&P's: Sept. S&P’s are currently 7.25 higher at 2786.25. Other than being net long some remaining out of the money puts which are due to expire I am once again on the sidelines.
Currencies: As of this writing the Sept. Euro is currently 41 lower at 1.1820, the Yen 34.5 higher at 0.91410, the Pound 20 higher at 1.3436 and the Dollar Index 12.2 higher at 93.812. We are currently long the Euro, long the Pound and short the Dollar Index. The Euro is about 100 points below overnight highs as the ECB leaves rates unchanged amid indications that the ECB will leave rates unchanged through June 2019.
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