FXS: Job Report disappoints, metals and treasuries rally
Financials: Sept. Bonds are currently 5 lower at 166'15, 10 Yr. Notes 5.5 lower at 130'25.5, 5 Yr. Notes 3.5 lower at 120'22.5 and June 2017 Eurodollars 2 lower at 99.010.
Friday's disappointing Jobs Report (an increase in non-farm payrolls of 38K vs. expectations of 160K) rallied treasuries across the curve causing many analysts to cancel predictions of a rate hike in the near future. Being ever the contrarian and one who shies away from political controversy, I feel we will have a rate hike before the Dem. And Rep. conventions in an effort not to have a rate hike be overtly politicized. I am once again willing to "go back to the well" and sell the June 2017 Eurodollar above 99.05 or go short the 5 or 10 Yr. Notes on sharp rallies.
Grains: July Corn is currently 7'6 higher at 425'6, Beans 20'4 higher at 1152'4 and Wheat 8'4 higher at 505'6. If you have been a buyer on breaks in Corn, congrats!! Take profits and start looking at the Dec. contract on breaks. If you followed me into the long Nov./short July spread, my condolences. We put this on at 32'4 premium July and are looking to take a loss in the 40-45'0 area (currently trading at 48'2).
Cattle: Live Cattle has rallied 300-500 points since my last "Report". We took profits on short June contracts and went long Aug. and/ or spread long Oct./short Feb. at 37 points premium the Feb. This spread is now at 60 points premium Oct. Take profits from long positions and forward spreads and stand aside.
Silver: July Silver is currently 8 cents higher 16.445 and Aug. Gold 2.50 higher at 1245.50. We remain long. Both of these metals benefitted from Friday's employment numbers as analysts turned back the clock so to speak on an imminent rate hike. I feel these metals will ultimately hold value in spite of a small rate hike.
S&P's: June S&P's are currently 4.50 higher at 2102.50. Treat as a trading affair between 2080.00 and 2107.00.
Currencies: As of this writing the Sept. Euro is 12 higher at 1.1398, the Yen38 lower at 0.93660, the Pound 113 lower at 1.4412 and the Dollar Index 10 lower at 94.060.
Since my last letter we were stopped out of a long Yen position in the 0.9070 area and have been on the sidelines having watched this currency rally back to current levels. I am a seller of the Dollar Index on sharp rallies (95.30 area). I am also looking for selling opportunities in the Pound above 1.4600 and feel the Pound will come under pressure whether or not GB chooses to stay in the EU.
