This Week's Commitment Of Traders: How Noncommercials Are Positioned

Following futures positions of non-commercials are as of November 13, 2018.

10-year noteCurrently net short 333.2k, down 206k.

On October 5, the 10-year rate (3.07 percent) began retreating after touching 3.25 percent – the highest since May 2011.  Thursday last week, it rallied to 3.24 percent, before once again meeting with selling pressure.  On both occasions, yields went on to slightly undercut support at 3.11 percent.  This time around, it just might stick.

Friday’s (this week) low of 3.07 percent came just above the daily lower Bollinger band.  That was also the case on October 26 when the 10-year rate fell to 3.06 percent to successfully test that band.  Should a bounce occur next week, what transpires around 3.11 percent will be telling.  The latest breach of 3.11 percent came about after bond bulls kept hammering on that support.

In the meantime, non-commercials have been quietly reducing their net shorts.  Since accumulating record net shorts seven weeks ago, they have cut back by 56 percent.  Yields potentially drop more if these traders continue to unwind.

30-year bondCurrently net short 73.3k, up 2k.

Major economic releases next week are as follows.  Happy Thanksgiving!

The NAHB housing market index for November is due out Monday.  Builder sentiment in October rose a point month-over-month to 68.  Last December’s 74 was the highest since 75 in July 1999.

Tuesday has on tap October’s housing starts.  In September, starts fell 5.3 percent m/m to a seasonally adjusted annual rate of 1.2 million units.  January’s 1.33 million was the highest since 1.35 million in July 2007.

Wednesday brings durable goods (October), existing home sales (October) and University of Michigan’s consumer sentiment index (November, final).

Orders for non-defense capital goods ex-aircraft – proxy for business capex plans – rose two percent year-over-year in September – substantial deceleration from August’s 7.9-percent increase.

Existing home sales in September dropped 3.4 percent m/m to 5.15 million units (SAAR).  Last November’s 5.72 million was the highest since 5.79 million in February 2007.

Preliminarily, November consumer sentiment fell three-tenths of a point m/m to 98.3.  March’s 101.4 was the highest since 103.8 in January 2004.

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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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