Equities Sell Off, Treasuries Rally. The Nemenoff Report 12/06/18

Financials: March Bonds are currently 19 higher at 142’24, 10 Yr. Notes 9.5 higher at 120’10 and 5 Yr. Notes 6.5 higher at 13’11.5. Treasuries have rallied sharply in the last 5 sessions as traders took a flight to safety. Yield curve spreads have imploded as the 10 yr./30 yr. spread has narrowed to 24 basis points from 31 basis points. My spread of long 5-10 Yr. Notes/short 3- Bonds is now at a $3,000+ loss. My intention is to liquidate when/if the market has a substantial set back. I also recommended going short Mar. Bonds above 140’16. I recommend using a stop at 143’18 against this position. If the Bonds should break below 141’28 lower your stop to 142’30. It is expected that the Fed will raise rates by 25 basis points at the Dec. FMOC meeting. Many market pundits claim to be seeing signs of a market slow down which could confirm should the yield on the 10 Yr. Note slip below the yield on the 2 Yr. Note which most economists would refer to as recessionary. Should this come to fruition I suspect there will be only 2 rate increases in 2019.
Grains: March Corn is currently 1’0 lower at 383’2, Jan. Beans 6’6 lower at 906’6 and March Wheat 4’2 lower at 513’4. The market hit my upside objectives Sunday evening/Monday morning when it was announced that progress has been made with China over trade talks and tariffs at the G-20 summit resulting in a 90 day freeze on current tariffs and a hold on proposed January 1st tariff increases. The market has since discounted this scenario. WE went short Mar. Corn at 384’0 and short Jan. Beans just above 920’0. If you are short Corn use a protective buy stop at 392’0. If you are short Jan. Beans either take profits or use a buy stop at 917’4. If the Beans trade below 894’0 either take profits or lower your stop to 908’4.
Cattle: Live and Feeder Cattle moved a bit higher in the last week giving us the opportunity to go short at my target price of 122.00 in Feb. LC.
Silver: March Silver is currently 10 cents lower overnight and 5 cents higher since last Thursday’s “Report”. I remain long.
S&P’s: Dec. S&P’s are currently 36.00 lower at 2666.00. Last week we recommended buying the Dec. 2600 put or buying the 2725/2675 put spread. If you are straight long puts either take profits or roll your position to the March 2500 put. If you are in the long Dec. 2725/short Dec. 2675 put spread take profits.
Currencies: As of this writing the Dec. Euro is 17.5 higher at 1.1368.5, the Yen 29 higher at 0.8871 and the Pound 29 higher at 1.2771. The Dec. Dollar Index is 15.5 lower at 96.885. We remain long the Yen and short the Dollar Index.

Regards,
Marc