(9-30-12) We continue to trade the December Long Bond contract from the long side, as we have been doing for a number of months now.

We were buyers of the contract on our standing order at 149.06 in Friday's overnight trade, selling on our standing order at 149.14. Bonds continue to act well.

Last week's series of US Treasury Bond auctions were the best in years. Demand for US Treasury instruments continues to rise, as long rates continue to fall due to persistent fear bid of European and Asian calamity.

We see no reason that this trade will be interrupted. Continue to own Bonds.

The December Dollar Index broke out of the 79.30 resistance area in line with our previous week's suggestion. It was able to establish a close above 80.00 in Friday's session.

We would expect the Dollar to work higher as the ECB has shot its load. The only blemish on the Dollar horizon is the Spanish bailout, but we believe that even that will have only a temporary effect on the Dollars.