This Week's Commitment Of Traders - Peeking Into Futures' Futures

Following futures positions of non-commercials are as of May 21, 2019.

10-year noteCurrently net short 423.4k, up 70.5k.

There goes that support. Thursday’s 10-basis-point drop in the 10-year Treasury yield (2.32 percent) sliced right through nine-year support at 2.40 percent.  Earlier on Wednesday last week, bears (price) had defended an intraday low of 2.36 percent from late March.  The rally since that low stopped right at 2.61 percent mid-April.  Going back a decade, 2.62 percent has proven to be an important level.  This has been the case particularly since December 2016.  A breakout occurred in January last year, and a breakdown this March.

With the rather unexpected loss this week of 2.40 percent, bears now have another level of resistance to worry about.  Since the 10-year rate peaked at 3.25 percent last October, there has been a persistent pattern of lower highs and lower lows.  Until this changes, it is a losing proposition for non-commercials, who have sizable holdings in net shorts in 10-year-note futures, which rose to a 28-week high this week.

30-year bondCurrently net short 44k, down 1.9k.

Major economic releases next week are as follows.  Markets are closed Monday for observance of Memorial Day.

The S&P Case-Shiller home price index for March is due out Tuesday.  Nationally, February home prices rose four percent year-over-year.  Growth has decelerated since rising 6.5 percent in March last year.

The second estimate of 1Q19 GDP will be published Thursday.  The first print showed real GDP expanded at a 3.2 percent annual clip, matching the long-term average going all the way back to 2Q47, and much faster than the post-Great Recession average of 2.3 percent.

Friday brings personal income (April) and the University of Michigan’s consumer sentiment index (May, final).

In the 12 months to March, core PCE – the Fed’s favorite measure of consumer inflation – rose 1.55 percent, the slowest pace since September 2017.  Except for last July, inflation has not grown with a two handle since May 2012.

Preliminarily, consumer sentiment in May jumped 5.2 points month-over-month to 102.4.  This was the highest since January 2004.

Crude oilCurrently net long 582.3k, down 10.8k.

The EIA report for the week of May 17 showed US crude stocks jumped 4.7 million barrels to 476.8 million barrels – the highest since July 2017.  Stocks of gasoline and distillates rose, too – up 3.7 million barrels and 768,000 barrels to 228.7 million barrels and 126.4 million barrels, respectively.  As did crude production, which increased 100,000 barrels per day to 12.2 million bpd.  Refinery utilization inched down six-tenths of a percentage point to 89.9 percent.  Crude imports, however, fell 669,000 bpd to 6.9 mbpd.

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