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Financials: June Bonds are currently 13 points lower at 152’11, 10 Yr. Notes 8 lower at 125’12 and 5 Yr. Notes 5 lower at 116’16.5. We are still at a loss on short positions in Treasuries as these markets have been in risk off mode as equities work lower over Trade War fears and investors have sought the safety of U.S. treasuries. Of note the yield spread between the 2 Yr. and 5 Yr. is now negative with the 2 Yr. yielding 5+ basis pts. over the 5 Yr. Also of note is that the spread in yield between the 3 month and 30 yr. is close to inverting with the3 month close to surpassing the 30 Yr. Bond in yield. If this happens for an extended period of time it could signal a recession. It is time to roll positions into Sept. I will use protective buy stops just above recent high in Sept. Bonds at 152’23.
Grains: July Corn is currently 4’4 higher at 423’2, Beans 2’2 higher 874’2 and Wheat 5’4 higher at 496’4. Continued wet weather and flooding has delayed planting in central states causing worry over yields and fear that late planting will switch from Corn to Beans producing a significant rally in Corn because of lowered production estimates. Last week we tried the short side of July Corn. If you were nimble there was opportunity for an 8 cent profit. I am now recommending putting on the long new crop (Dec.)/ short old crop (July) Corn spread around 17 cents premium the Dec.
Cattle: Live Cattle has rallied over the last partial due to a somewhat friendly Cattle on Feed Report which showed an increase in Placements of 7.0% far below the trade estimate of 13.0%. Feeder Cattle prices continued to work lower as a result of sharp increases in feed grain prices. We have covered the short Aug.LC 102 put position. I still feel this market is headed sideways and I’m in stand aside mode. That being said, I will resell the Aug.LC 102 above 140 points should the opportunity arise.
Silver: July Silver is currently 1 cent higher at 14.42. We remain long with a protective sell stop at 13.80 on recently purchased additional contracts.
S&P’s: June S&P’s are currently 10.00 higher at 2790.00 down sharply over the last week due to fears of a trade war with China. Treat as a trading market between 2765 and 2825.00
Currencies: We have been stopped out of short positions in the Dollar Index in the 98.20 area and ae currently on the sidelines in all currencies.