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Financials: June Bonds are currently 5 higher at 142’26, 10 Yr. Notes 2 higher119’11 and 5 Yr. Notes 1.5 higher 113’10. The yield spread between the 10 Yr. Note and 30 Yr. Bond narrowed to 15 basis points for a few moments earlier in the week and has since bounced back to 17.5 basis points. If you did the yield curve spread of short 2 Bonds/long 5 10 yr. Notes you are pretty much of a scratch, if you did them 3/5 you will be ahead about $850.00. If you are spread 3/5 I recommend covering one of the Bonds. As a whole the market sold off about 1’00 point for the week. I am still recommending being long either puts or put spreads, but will liquidate if the market trades below 139’24. I feel that the next rate hike, probably in June, is close to being built into the market and is mostly reflected in the short end of the yield curve and due to this observation I am looking at the short Dec. 18/long Dec. 19 Eurodollar spread in the 40 point premium Dec. 2018 area.
Grains: July Corn is currently fractionally lower at 402’2, July Beans 2’0 higher at 1018’0 and July Wheat 1’2 higher at 511’6. Grains drifted lower last week due to better planting conditions, a strong Dollar and an underlying fear of possible increase on tariffs by China. I will be a seller in July Beans above 1065’0 and below 980’0 should this mornings’ Grain Report show a major surprise.
Cattle: June Live Cattle are slightly higher for the week gaining almost daily on deferred contracts as the gap between cash and futures narrows. I am willing to trade the short side of the market from the 107.00-108.00 level (up from last weeks’ recommended 106.00-108.00 level) and from the long side in the 103.00 area.
Silver: July Silver is currently 20 cents higher at 16.74 up 16 cents from a week ago. I remain long.
S&P’s: June S&P’ are currently 6.50 higher at 2702.50. Over the last week the market provided the profit taking opportunity we were looking for in the 2605.00 area trading as low as 2593.00. I am once again looking to put on a short biased position.
Currencies: As of this writing the June Euro is currently 58 higher at 1.1952, the Yen 21 higher at 0.91590, the Pound 16 lower at 1.3562 and the Dollar Index 30.4 lower 92.580. I am once again looking to the short side of the Dollar at the following levels: short the Dollar Index above 93.200, long the Euro below 1.1725 and long the Pound below 1.3400. I feel that the next U.S.interest rate hike is now built into the market.