Yields have jumped to new recent highs

Marc Nemenoff PRICE Futures Group

Financials: As of this writing (6:30am) June Bonds are 2 higher overnight at 155’21, down 2’21 for the week. 10 Year Notes are unchanged at 131’30, down 23 for the week. 5 Year notes are up 1 overnight at 123’31, down 9 for the week. Yields have jumped to new recent highs with 2 yr. up 2 basis points to 0.17%, the 5 yr. up 8 at 0.87%, the 10 up 12 at 1.69% and the 30 yr. bond up 17 at 2.41%. Last week’s jobs report showed an increase of 266,000 non-farm payroll, far below expectations of one million plus. This rallied Bonds to a recent high of 160’03, giving an opportunity to reinstate a short position between 159-160’00. Yesterday’s CPI came in at 0.8% and core inflation at 0.9%, nearly 3 times expectation. The results of higher than expected inflation were a sharp rise in yields and a sharp break treasury prices. If short use this break to either cover or enter a close protective buy stop.

Grains: Yesterday’s Crop Report was bearish corn and neutral beans. July Corn is currently 14’0 lower overnight and 13’0 lower for the week. Dec. corn 10 cents lower. July beans 10’0 lower overnight and 71’0 higher for the week at 1632’0. Nov. beans are down 19’0 this morning at 1424’6, up 29’0 since last Thursday. We remain long Nov. beans.

Cattle: June Live Cattle closed slightly lower yesterday at 118.60 up 417 for the week. Aug. LC closed up 27 at 122.32. Aug. FC closed up 167 at 150.52 up530 for the week. Lower feed grain prices as a result of wed. Grain report pushed feeder cattle prices sharply higher narrowing the spread between live and feeders. If long LC take advantage of recent rallies and liquidate. Treat as a trading affair in June LC between 116.40 and 119.80.

Silver: July Silver is currently 18 cents lower at 27.07 up 25 cents for the week. I am using breaks to cover losing short positions (overnight low was 26.78).

S&P: June S&P’s are currently up 9.00 at 4067.00, down 96.00 for the week. This market does not like inflation based higher interest rates. I am going to try the long side on a teat of the overnight low of the 4030.00 area with a 10.00 stop.

Currencies: We remain friendly to the Yen and Pound and have a negative bias to the Dollar Index. My downside objective for the D.I. Was nearly met earlier in the week as a new recent low was made at 89.995. I will cover short biased positions should the market break below 90.00 again.

Author

Marc Nemenoff

PRICE Futures Group

Mr. Nemenoff is a 37-year veteran of the futures industry.

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