CoT: Peek Into Future Through Futures; Week In Review

Following futures positions of non-commercials are as of March 20, 2018.

10-year note: Currently net short 313.3k, up 41.9k.

Chairing his maiden meeting as Fed chief, Jerome Powell probably could not have asked for more insofar as markets’ reaction was concerned.  They did not know whether to make heads or tails of what transpired Wednesday.

On that day, the FOMC decided to hike the fed funds rate by 25 basis points to between 1.5 percent and 1.75 percent but at the same time stuck to its forecast of three hikes this year versus widespread market speculation pre-meeting that the dot plot would signal four.

Markets were not quite sure how to react to this supposed dovish hike.  Except for the Russell 2000 small cap index, other major US indices fell in that session.  In normal circumstances, investors/traders tend to gravitate toward small-caps when sentiment is risk-on.  But then again, gold, which traditionally is a risk-off asset, rose.  It is possible the yellow metal keyed off of a lower dollar.  That said, the US dollar index was not able to rally on a steeper short end of the yield curve.  Ten-year T-yields rallied in a long-legged doji session, but resistance held.

If these market reactions did not make sense, it was probably because they were keying off of technicals more than the Fed’s interest rate decision (more here).  For instance, the S&P 500 large cap index had already fallen out of a seven-week symmetrical triangle on Monday.  Come Wednesday, post-FOMC statement, it tried to rally but was rejected hard at moving-average resistance, and continued lower.  Just one of those instances when technicals won out over the Fed.

30-year bond: Currently net long 52.4k, down 31.1k.

Major economic releases next week are as follows.  Markets are closed Friday for observance of Good Friday.

On Tuesday, January’s S&P Corelogic Case-Shiller home price index is published.  Nationally in December, home prices jumped 6.3 percent month-over-month.

Wednesday brings GDP (4Q17, final) and corporate profits (4Q17).

The second estimate showed real GDP grew 2.5 percent in 4Q17.

Corporate profits adjusted for inventory valuation and capital consumption rose 5.3 percent year-over-year in 3Q17 to a seasonally adjusted annual rate of $2.21 trillion.