Commitment Of Traders, Hedge Fund Positions For This Week

Following futures positions of non-commercials are as of August 6, 2019.

10-year noteCurrently net short 390.9k, up 7k.

The 10-year Treasury yield (1.73 percent) dropped to 1.6 percent intraday Wednesday – the lowest since September 2016.  July that year, rates fell to 1.34 percent, which was essentially a successful retest of 1.39 percent set in July 2012.  It is probably just a matter of time before the 10-year heads back down there, and this time around the support may not hold.

The US economy is still growing.  Yet, the long end of the bond market continues to attract bids, putting downward pressure on the yield.  Most recently, rates peaked at 3.25 percent last October, and it has been all downhill since.  We can just imagine how rates will behave when the next downturn hits.  To that end, non-commercials, who are neck-deep in their bets on higher rates – and wrongly at that – will only provide a tailwind to this downward momentum.

30-year bondCurrently net short 56.3k, up 23.7k.

Major economic releases next week are as follows.

Tuesday brings the NFIB optimism index (July) and CPI (July).

Small-business optimism dropped 1.7 points month-over-month in June to 103.3.  This was the 31st consecutive month of 100-plus reading, including 108.8 in August last year.

June consumer prices were up 0.1 percent m/m and 1.65 percent in the 12 months to June.  Over the same time period, core CPI rose 0.3 percent and 2.13 percent respectively.

Retail sales (July), productivity (2Q19), capacity utilization (July), the NAHB housing market index (August) and TIC data (June) are due out Thursday.

In the 12 months to June, retail sales rose 3.4 percent to a seasonally adjusted annual rate of $519.9 billion – a new high.

From 1Q18 to 1Q19, non-farm business productivity rose 2.4 percent – the best pace since 3Q10.

Capacity utilization fell 0.2 percent m/m to 77.9 percent.  Last November’s 79.6 percent was the cycle high.

Builder sentiment in July rose a point m/m to 65.  The cycle high 74 in December 2017 was the highest since July 1999.

Foreigners sold $189 billion in US stocks in the 12 months to May, down from $214.2 billion worth in April, which was a record.

Housing starts (July) and the University of Michigan’s consumer sentiment index (August, preliminary) come out Friday.

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