Latest Commitment Of Traders Report - Noncommercial Positions

Following futures positions of non-commercials are as of December 1, 2020.

10-year note: Currently net long 25.7k, down 89.2k.

Once again, the 10-year Treasury yield (0.97 percent) is back at testing the one percent level. Friday, rates rose as high as 0.99 percent intraday. The 10-year was yielding 0.84 percent on November 30. Before that, on the 9th last month, the day Pfizer (PFE) announced its positive vaccine news, rates hit 0.98 percent before retreating. Even earlier, on June 5, the 10-year tagged 0.96 percent.

The last time the 10-year yielded one percent was on March 20. It has based long enough for a breakout to occur. Encouragingly for bond bears (on price), rates have made higher lows since bottoming at 0.4 percent in March, and particularly the past four months. A breakout opens the door to a test of 1.5 percent.

Non-commercials promptly cut back net longs in 10-year note futures from 152,319 contracts two weeks ago to 25,748 this week.

The question is, should rates break out, how long before the Fed at least tries to jawbone them down? There is too much leverage in the economy. Further, low rates have provided a big tailwind to housing.

30-year bond: Currently net short 235.1k, up 33.2k.

Major economic releases for next week are as follows.

The NFIB Optimism Index (November) and labor productivity (3Q20, revised) come out Tuesday.

In October, small-business job openings dropped three points month-over-month to 33. Post-pandemic, it hit 23 in May. Its record high was 39, which was hit three times between December 2018 and July 2019.

Preliminarily, non-farm output/hour rose at an annual rate of 4.9 percent in 3Q20. This was the fastest pace since 4Q09.

Job openings (JOLTS, October) are scheduled for Wednesday. Openings were up 84,000 m/m in September to 6.44 million. Pre-pandemic, job openings were seven million in January and bottomed at five million in April.

The consumer price index (November) is due out Thursday. In October, both headline and core CPI were unchanged m/m. In the 12 months to October, they respectively rose 1.2 percent and 1.6 percent.

Friday brings the producer price index (November) and the University of Michigan’s consumer sentiment index (December, preliminary).

Producer prices increased 0.3 percent m/m in October and 0.5 percent in the 12 months to October. Core PPI over the same time period advanced 0.2 percent and 0.8 percent, in that order.

Consumer sentiment fell 4.9 points m/m in November to 76.9. The index reached 71.8 in April and was 101 in February.

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