CoT: Futures Positions For The Week

The following futures positions of non-commercials are as of June 11, 2019.

10-year noteCurrently net short 366k, down 101.7k.

Tuesday’s intraday high of 2.17 percent on the 10-year Treasury yield predictably attracted bond bulls.  There was gap-down resistance from May 31, and it held.  Rates came under pressure in the next three sessions but the drop was not enough to take out last Friday’s low of 2.05 percent, which came pretty close to testing the September 2017 low of 2.03 percent.  A breach of this will only add to momentum intact since the 10-year peaked at 3.25 percent last October.  Since then, there has been a pattern of lower highs and lower lows.

The past couple of weeks, the 10-year (2.09 percent) has essentially gone sideways, which is what is needed should bond bears (price) are to get a relief rally in yields.  On the way down, they lost major support at 2.62 percent, which goes back a decade.  This was then followed by a loss three weeks ago of 2.36 percent.  If sideways action continues in the next several sessions and shorter-term averages turn up, 2.36 percent is the path of least resistance.  The 50-day moving average, currently 2.39 percent and dropping, should get there in the next several sessions.

30-year bondCurrently net long 18.2k, up 27.7k.

Major economic releases next week are as follows.

Monday brings the NAHB housing market index for June.  In May, home builder activity rose three points month-over-month to 66.  The cycle high 74 was reached in December 2017, which was the highest since July 1999.

Housing starts for May are on tap for Tuesday.  April was up 5.7 percent m/m to a seasonally adjusted annual rate of 1.24 million units.  The cycle high 1.34 million was reached in January last year, which was the highest since July 2007.

Also Tuesday, a two-day FOMC meeting begins.  No change is expected.  The last action they took was a 25-basis-point raise last December, to 225 to 250 basis points.  For the remainder of the year, markets have aggressively priced in at least a couple of 25-basis-point cuts beginning July.  It will be interesting if Chair Jerome Powell drops any hints as to if markets are overly optimistic.

May’s existing home Sales come out Friday.  April sales edged down 0.4 percent m/m to 5.19 million units (SAAR).  Sales have weakened since posting 5.72 million in November 2017, which was the highest since February 2007.

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