CoT This Week: The Future Via Futures, Noncommercial Positions

Following futures positions of non-commercials are as of July 6, 2021.

10-year note: Currently net short 25.6k, down 34.4k.

On Tuesday, slicing through low-1.40s, the 10-year (1.36 percent) broke not one, two but triple support – four-month descending channel, 11-month rising trend line and nine-year horizontal (more on this here). By the end of the week, rates rallied back to end right on the August ’20 trend line but the other two support levels have been compromised. This is potentially significant.

Early this year, yields broke out of one percent, before proceeding to rally to 1.77 percent by March 30.

On Thursday, the 10-year dropped as low as 1.27 percent, just above the 200-day moving average at 1.24 percent, before rallying. The daily is oversold. What transpires at the broken support will decide the fate of the next major move. In due course, odds of a drop to one percent cannot be denied.

30-year bond: Currently net short 107.9k, up 11.9k.

Major economic releases for next week are as follows.

The NFIB Optimism Index (June) and the consumer price index (June) are scheduled for Tuesday.

 Small-business optimism dropped two-tenths of a point month-over-month in May to 99.6. The all-time high of 108.8 was set in August 2018.

Headline and core CPI rose 0.6 and 0.7 percent m/m in May respectively. From a year ago, they respectively jumped five percent and 3.8 percent – the steepest since August 2008 and June 1992.

The producer price index (June) is due out on Wednesday. Producer prices rose 0.4 percent m/m in May and decreased 0.8 percent in the 12 months to May. Over the same time period, core PPI edged up 0.1 percent and fell 0.4 percent, in that order.

Industrial production (June) is on tap for Thursday. Capacity utilization in May rose 16.4 percent year-over-year to 75.2 percent – a 15-month high.

Friday brings retail sales (June), the University of Michigan’s consumer sentiment index (July) and Treasury International Capital data (May).

May retail sales fell 1.4 percent from April’s record $628.7 billion (seasonally adjusted annual rate). In April last year, sales saw a post-pandemic low of $409.8 billion.

Consumer sentiment increased 2.6 points m/m in June to 85.5 – a two-month high.

In the 12 months to April, foreigners’ net purchases of US stocks dropped a tad to $398.6 billion from record $406.4 billion in March.

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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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