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Financials: Dec. Bonds are currently 18 higher at 140’16, 10 Yr. Notes 7 higher at 119’19.5 and 5 Yr. Notes 3.5 higher 113’02.0. Yesterday Fed Chairman Powell spoke and his speech was interpreted as being dovish on rates for 2019. The chairman indicated that the economy is nearing a neutral position given that inflation is low in spite of near full employment and the need for further tightening is now “data dependent”. By looking a Fed Fund futures the market is now considering an 82+% chance of a rate increase of 25 basis points in Dec. Next years estimates have no gone from rate hikes to 2 rate hikes. So where does that leave us? We still have on the yield curve spread of short 3-30 Yr. Bonds/long 5-10 Yr. Notes. The spread in total is 11 ticks against us ($343.75). I recommend holding the spread but rolling into the March contract. I will also go short March Bonds above 140’16.
Grains: March Corn is currently 1’4 lower at 371’6, Jan. Beans 6’2 lower at 884’2 and March Wheat 3’2 lower at 508’2. These markets appear to be stuck in a sideway’s range and have not given me any reason to initiate a trade. Maybe the upcoming G-20 meeting will have a negative dollar effect which could provide a rally to sell Beans above 920’0 and Corn above 384’0.
Cattle: Live and Feeder Cattle were mostly sideways for the past few sessions. I am on the sidelines but will be a seller in Feb. LC should the market rally above 122.00
Silver: Dec. Silver is currently 2 cents lower at 14.30 and 12 cents lower for the week. It is time to roll into March contracts which are currently at 14.430. I remain long.
S&P’s: Dec. S&P’s are currently 5.00 lower at 2736.00 after an enormous advance of 65.00 points on Wednesday after Fed chairman Powell’s dovish comments on rates. I believe the “trade war” with China will not show any near term resolution at this weekend’s G-20 meeting and will again recommend concentrating on the short side of the market should we rally above the 2760.00 area. Look to buy cheap options such as the 2650.00 put or the 2725/2675 if/when the market trades above 2760.00
Currencies: As of this writing the Dec. Euro is currently 5.5 cents higher at 1.13895, the Yen 17 higher at 0.88365, the Pound 57 lower at 1.2787 and the Dollar Index 1.1 lower at 96.67. We remain long the Yen and short the Dollar Index, both with a small loss. This weekend’s G-20 meeting should have an effect on the currencies, I believe the Dollar is headed lower at this time.