Cot: Peeking At The Future, Sept. 12

Following futures positions of non-commercials are as of September 7, 2021.

10-year note: Currently net long 780, up 30.6k.

Once again on Tuesday, the 10-year treasury yield faced stiff resistance at just under 1.4 percent; the session high 1.39 percent was sold a tad above the daily upper Bollinger band. This was the third instance in just under a month that bond bears (on price) failed to clear the hurdle, with the prior two having occurred on the 12th and 26th last month.

Rates remain sandwiched between two crucial levels – low-1.40s and one percent. After the 10-year bottomed at 0.4 percent in March last year, one after another resistance gradually fell. In January this year, one percent gave way, followed by low-1.40s the next month. Rates then went on to rally to 1.77 percent by March. The drop from that high bottomed at 1.13 percent in July and August.

Rejection at high-1.30s – before even reaching low-1.40s – speaks of the momentum bond bulls are enjoying. That said, rates are well above one percent, where they are likely to face stiff opposition from the bears.

Right here and now, the 10-year (1.34 percent) has room to head lower – toward low-1.20s, or 1.13 percent in a worse-case scenario for the bears.

30-year bond: Currently net short 83.6k, down 20.6k.

Major economic releases for next week are as follows.

The NFIB optimism index (August) and the consumer price index (August) are due out on Tuesday.

Small-business job openings rose three points month-over-month in July to 49 – a new record.

In July, headline and core CPI increased 0.5 percent and 0.3 percent respectively over June. Over a year ago, they respectively jumped 5.4 percent and 4.3 percent.

Industrial production (August) comes out on Wednesday. Capacity utilization edged up 0.9 percent m/m in July to 76.1 percent – a 17-month high.

Thursday brings retail sales (August) and Treasury International Capital data (July).

Retail sales increased 15.8 percent year-over-year in July to a seasonally adjusted annual rate of $617.7 billion. Sales have weakened since April when they surged 53.4 percent y/y to a record $628.8 billion.

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Disclaimer: This article is not intended to be, nor shall it be construed as investment advice. Neither the information nor any opinion expressed here constitutes an offer to buy or sell any ...

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