KC/Chicago Wheat spread narrows

Financials: Mar. Bonds are currently 10 lower at 153’22, 10 Yr. Notes 6 lower at 126’08 and 5 Yr. Notes 2.5 lower at 118’17.7. Not much has happened with these markets over the last few sessions as the market awaits the FOMC meeting mid-month and this weeks Employment Report on Friday. The current conventional wisdom is that if the Report shows an increase of 170,000+ in non-farm payrolls and unemployment at 5% the Fed will have reason to justify a rate increase. We continue to hold the ratio spread of long 3-5 Yr. Notes/short 2-10 Yr. Notes. We are also holding the long June 2016/short June 2017 Eurodollar spread, currently trading at 62 points premium the 2016 contracts.

Grains: Mar. Corn is currently 2’0 higher at 374’2, Jan. Beans 6’6 higher at 887’6 and Mar. Wheat 3’4 higher at 479’0. We remain long Mar. Corn and will raise our protective sell stop to the 363’0 level. The long Mar. KC Wheat/short Mar. Chicago Wheat spread is currently at 3’6 premium the Chi. Contract. We have raised our short term objective for this trade to 8’0-15’0 cents premium the KC contract.

Cattle: Live and Feeder Cattle closed sharply lower yesterday as feed grain prices rose. LastFriday Dec. LC traded above the 132.00 level giving us reason to raise our protective stop against long LCZ position to the 130.50 level and were consequently stopped out. We are now looking to the long side of Feb. LC below the 130.10 level. I am also willing to go long Apr./short June at 7.80 premium the Apr. if given the opportunity. I am on the sidelines in Feeders.

Cattle: Live and Feeder Cattle closed sharply lower yesterday as feed grain prices rose. LastFriday Dec. LC traded above the 132.00 level giving us reason to raise our protective stop against long LCZ position to the 130.50 level and were consequently stopped out. We are now looking to the long side of Feb. LC below the 130.10 level. I am also willing to go long Apr./short June at 7.80 premium the Apr. if given the opportunity. I am on the sidelines in Feeders.

S&P's: Dec. S&P’s are currently 8.00 higher at 2087.75. Treat as a trading affair between 2074.00 and 2096.00.

Currencies: As of this writing the Dec. Euro is currently 29 higher at 1.0605, the Yen 5 lower at 0.8119 and the Pound 5 higher at 1.5064. We were stopped out vof a recent long Euro position with a small loss and a long Yen position with a small profit. I am willing to jump back into the Yen with a stop at 0.8060.