CoT: Looking At The Future Thru Futures, July 12

Following futures positions of non-commercials are as of July 7, 2020.

10-year note: Currently net long 43.2k, up 12.2k.

The 10-year Treasury yield is clinging on to support.  It shed four basis points this week to close at 0.63 percent; Friday, it dipped as low as 0.57 percent.

Since bottoming on March 9th at 0.40 percent, the 10-year has pretty much been going back and forth between 0.73 percent and 0.59 percent.  Bond bears (on price) defended the bottom of the range Friday.

Of late, non-commercials have been betting that the risk is to the downside on rates.  As recently as five months ago, they were net short 398,919 contracts in 10-year note futures.  By June 9th, they were net long 2,254 contracts, with this week at 43,187.

Concurrently, for 13 straight weeks through this Wednesday, taxable bond funds attracted $121 billion (courtesy of Lipper).  Perhaps importantly, TLT (iShares 20+ year Treasury Bond ETF) three weeks ago broke out of a weekly pennant.

A lot of money is betting on lower rates.  It probably is early to take a contrarian view.

30-year bond: Currently net short 105.1k, down 3.8k.

Major economic releases next week are as follows.

Tuesday, the NFIB optimism index (June) and the CPI (June) are scheduled.

Small-business optimism rose 3.5 points month-over-month in May to 94.4.  April’s 90.9 was a seven-year low.

Both headline and core consumer prices in May edged down 0.1 percent m/m.  In the 12 months to May, they respectively rose 0.1 percent and 1.2 percent.

Industrial production (June) is due out Wednesday.  Capacity utilization in May inched up 1.3 percent m/m to 64.8 percent.  April’s 64 percent was the lowest ever going back to January 1967.

Retail sales (June), the NAHB housing market index (July) and Treasury International Capital data (May) will be out Thursday.

Retail sales in May jumped 17.7 percent m/m to a seasonally adjusted annual rate of $485.5 billion.  Sales peaked in January at $529.6 billion, dropping to $412.6 billion by April.

Builder sentiment shot up 21 points m/m in June to 58.  Before this, the index dropped to 30 in April from 76 last December.

In the 12 months to April, foreigners purchased $79.2 billion in US equities, down from $83.5 billion in March.  This is quite a turnaround from April last year when they sold $214.6 billion worth – a record.

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