CoT This Week: The Future Thru Futures, Hedge Fund Buys

Following futures positions of non-commercials are as of March 23, 2021.

10-year note: Currently net long 12.3k, up 8.2k.

The 10-year treasury yield enjoyed several breakouts this year – out of one percent early January, 1.2 percent mid-February and 1.4 percent later that month, and 1.63 percent toward the middle of this month.

Rates have come a long way from last March’s low of 0.4 percent, resulting in overbought conditions on several timeframes.

Shortly after staging the latest breakout, the 10-year tagged 1.75 percent on the 18th and retreated. Thursday’s low of 1.59 percent tested the 20-day moving average – successfully. By then, some daily indicators had reached the median. This was an opportune time for bond bears (on price) to let the markets know that they had not completely gone way. On Friday, the 10-year rallied five basis points to 1.66 percent, for a successful breakout retest.

The 1.75-percent high from seven sessions ago has now taken on significance. A breakout raises the odds of a run toward two percent. Should things evolve this way, the Fed may begin to act fidgety, resorting to aggressive verbal intervention.

30-year bond: Currently net short 127.8k, down 15.5k.

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

The S&P Case-Shiller Home Price Index (January) is scheduled for Tuesday. Nationally, home prices in December jumped 10.4 percent year-over-year. This was the fastest pace since January 2014. Prices have been appreciating at an accelerating pace since August 2019 when they rose 3.1 percent.

The ISM manufacturing index (March) is due out Thursday. Manufacturing activity rose 2.1 points month-over-month in February to 60.8. Last April, the index made a post-pandemic low of 41.7.

Friday brings the employment report (March). Since last April’s low of 130.2 million, 12.9 million non-farm jobs have been created. This is still 9.5 million short of the pre-pandemic high of 152.5 million from February last year.

WTI crude oil: Currently net long 576.1k, up 11.7k.

Despite the cargo ship Ever Given blocking the Suez Canal and some oil tankers rerouting around the southern tip of Africa adding a week to the journey, WTI ($60.97/barrel) shed 0.8 percent this week and was down as much as 6.8 percent at Tuesday’s low of $57.25. This was a third straight weekly drop.

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