The yield curve continues to flatten as interest rates rise slightly

Financial: March bonds are currently 16 higher at 161’10, 10-year ratings 6 higher at 130’12.5 and 5 years. Scores 1.5 higher at 120’27. A fairly volatile week as the market rebounded between 160’00 support and 164’00 resistance as traders absorbed the latest news on covid-19 variables such as Omicron which is apparently more contagious but less severe symptomatically as the Delta variation. Add to that growing tensions with Russia and China and you have water for volatility. Support remains at 160’00 and resistance at 164’00 for now. On the yield side, the yield curve continues to flatten as interest rates edged up over the week in favor of 2 and 5 years over 10 and 30 years. Conventional wisdom now expects the Fed to comment on when rates will rise and how many increases between 2022 and 2024 at the next FOMC meeting. Currently, the 2-year yield is 0.67%, the 5-year 1.24%, the 10-year 1.48% and the 30-year 1.87%.

Cereals: March corn is 1’0 at 586’0 lower and March bean 7’0 at 1262 “0. Beans and sideways trend remains lower on corn. March support remains at 571 ‘ 0 and resistance at 595’0. Support for Mar. Beans are currently at 1226’0 and resistance at 1276’0 USDA report later this morning.

Livestock: The February LC is 12 higher at 138.80. I think meat packers are overbought for the holiday season and that could lead to a short term backup in sales. For now, February LC support is at 137.50 and resistance at 139.65.

Silver: March silver is 44 cents lower and is trading below 22.00 to 21.98. The trend remains bearish with long term support just below 20.00. As I have said over the past few months this market is very volatile, but I think we will start to see a drop in volatility as this market starts to move closer to long term support.

S&P: The December S&P is down 8.00 to 4691.00. The market held the stated support of 4475.00 last week and erupted higher as fears of a new Covid-related lockdown eased. The sort term support is currently at 4636.00 and resistance is at 4713.00. Next week we will cite the March contract which is a 7.00 discount from the December contract.

Currency: The Dollar Index is up 25 points to 96.140. The trend remains up but I want to note that this market failed in the 95.60-95.80 area. Support is at 95.40, resistance remains above 96.50. If support is penetrated it will give me a reason to start looking at other major currencies such as Euro, Pound and Yen.

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