Following futures positions of non-commercials are as of September 11, 2018.
10-year note: Currently net short 682.7k, down 73.
The 10-year Treasury rate (2.99 percent) rose from 2.81 percent on August 22 to Friday’s high of three percent. At least near term, non-commercials have been rewarded for their persistently bearish outlook on 10-year note futures. Net shorts are near all-time highs. The question is, what happens medium- to long-term? Since peaking at 3.12 percent in May, the 10-year has made lower highs, although it is attempting to break out of a four-month channel drawn from that high. The three handle has consistently been viewed by bond vigilantes as a level where it has paid off to go long these notes. This sentiment has to do a 360 before non-commercials possibly make a killing. A lack thereof exposes them to risks of short squeeze in due course.
30-year bond: Currently net short 47.1k, up 6.7k.
Major economic releases next week are as follows.
The NAHB housing market index (Sep) and Treasury International Capital data (July) are scheduled for Tuesday.
Builder sentiment in August fell a point month-over-month to 67. Last December’s 74 was the highest since July 1999.
Foreigners have been cutting back on US equities. In the 12 months to June, they bought $30.1 billion worth, versus purchases of $135.7 billion in January.
Wednesday brings August’s housing starts. July inched up 0.9 percent m/m to a seasonally adjusted annual rate of 1.17 million units. January’s 1.33 million was the highest since July 2007.
Existing home sales for August are due out Thursday. July sales were down 0.7 percent m/m to 5.34 million units (SAAR). Last November’s 5.72 million was the highest since February 2007.
Crude oil: Currently net long 598.1k, down 25.4k.
Spot West Texas Intermediate crude ($68.99/barrel) Wednesday rose to $71.26 intraday, but was unable to hang on to all of the gains, closing at $70.37. It also fell short of last week’s high of $71.40. The EIA report for the week of September 7, which was out in that session, contained several positives, but apparently not enough for traders.
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