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Financials: June Bonds are currently 10 lower at 140’20, 10 Yr. Notes 2.5 lower at 118’15.0 and 5 Yr. Notes 0’00.5 lower at 112’27.5. Since last week the yield spread between the 30 Yr. Bond and the 10 Yr. Note has surprisingly (to me) narrowed to 13 basis points yielding 3.24% and 3.10% respectively. Even with the yield curve continuing to flatten the short 2 Bonds/long 5 10 Yr. Notes picked up 6 points. If you are still in this spread with the original ratio of short 3 Bonds/long 5 10 Yr. cover the one extra Bond and congratulate yourself with the extra profit. We also put on the long Dec. 2019/ short Dec. 2018 Eurodollar spread at 40 points premium the 2018 contract (currently at 40.5). I have of profit objective of the spread narrowing to 31 points.
Grains: July Corn is currently 1’6 higher at 401’0, July Beans 4’4 higher at 1004’2 and July Wheat 9’2 higher at 503’4. Overall the Grains remain under pressure due to a strong Dollar, improving weather conditions and currency problems in Argentina. That being said I feel that Beans will support in the 985’0 area and will be a buyer at that level should the market abide.
Cattle: In the last week we have seen June LC traded as high as 108.05 before breaking to just under the 102.00 level. If you went short in the 107.00-108.00 area (re: last week’s Report) take profits below 103.00. I am now looking to the long side of the market and will be a buyer on breaks. The cash market is still at a huge premium to the futures and I feel that this gap will narrow with not only a break in the cash but with a rise in futures.
Silver: July Silver is currently 7 cents higher at 16.45 and 29 cents lower for the week. We remain long. Gold is once again on my radar as it approaches long-term support in the 1275-1280.00 area. Both of these markets have suffered as a result of a strong Dollar due to an increase in short to mid-term rates (as the 10 Yr. holds above 3.1%). That being said I feel that Silver has held up fairly well.
S&P’s: June S&P’s are currently 6.50 lower at 2716.50. I am still holding short biased positions. Support is currently 2693.00 and resistance 2742.00.
Currencies: As of this writing the June Euro is currently 3 higher at 1.18310, the Yen 41 lower at 0.90485, the Pound 22 higher at 1.3526 and the Dollar Index 3.9 higher at 93.320. I am still recommending going short the Dollar Index above 93.20. I will also be a buyer in the Euro below 1.1725 and a buyer in the Pound below 1.3400.