Commitment Of Traders, Futures And Hedge Fund Positions - Sunday, Jan. 10

Following futures positions of non-commercials are as of January 5, 2021.

10-year note: Currently net long 27.7k, up 2.4k.

After losing one percent last March, bond bears (on price) had been unable to reclaim the level. That ended Wednesday when Democrats won two Georgia Senate runoff elections, forcing bond vigilantes to rerate inflation/growth expectations.

On Wednesday, the 10-year treasury yield rallied nine basis points to 1.04 percent, ending the week at 1.11 percent, up 19 basis points. As long as one percent is not breached, the path of least resistance is toward 1.4 percent (more on this here).

With the win in Georgia, Democrats now control the Senate, the House and the White House, raising the probability that President-elect Joe Biden will have an easier time to push through a bigger stimulus package, not to mention big infrastructure spending.

The bigger question is the Fed’s reaction function. In a leveraged economy – be it on the federal, corporate or household level – higher rates can set in motion a cascading effect, especially if they rise too quickly. If the 10-year does indeed march toward 1.4 percent, and then two percent, it would not be long before the Fed begins to intervene – first verbally and then by action.

30-year bond: Currently net short 187.6k, up 12.6k.

Major economic releases for next week are as follows.

The NFIB Optimism Index (December) and JOLTS (November) are due out Tuesday.

NFIB job openings inched up a point month-over-month in November to 34. The metric was down to 23 in May. Earlier, it hit record 39 three times between December 2018 and July 2019.

Non-farm job openings increased 158,000 m/m in October to 6.65 million. Openings languished at five million in April, having earlier peaked at 7.52 million in January 2019.

The consumer price index (December) is scheduled for Wednesday. In November, consumer prices inched up 0.2 percent both m/m and year-over-year. Core CPI rose 1.2 percent m/m in November and 1.6 percent in the 12 months to November.

Friday brings retail sales (December), industrial production (December) and the University of Michigan’s consumer sentiment index (January, preliminary).

Retail sales fell 1.1 percent m/m in November to a seasonally adjusted annual rate of $546.5 billion. This was the second straight m/m drop after reaching $552.8 billion in September – a record. In April, sales were $412.8 billion.

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This blog 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 security or ...

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