CoT This Week: Futures, Hedge Fund Positions

Following futures positions of non-commercials are as of April 9, 2019.

10-year noteCurrently net short 261.6k, up 37.3k.

During the week, job openings painted a mixed picture.  Non-farm job openings (JOLTS) for February dropped 538,000 month-over-month to 7.1 million.  Last November’s 7.6 million was the highest ever.  NFIB job openings for March, however, matched last December’s record high 39.  It is premature to conclude but it is possible jobs data is beginning to straddle the line.  In February, the economy created 33,000 non-farm jobs.  A mini-panic set in.  March, however, snapped back with 196,000, for a three-month average of 180,000.

Healthy job creation has been the impressive aspect of what otherwise has been a sub-par expansion post-Great Recession.  Weakness here will be the last straw.  If this scenario unfolds, it is just a matter of time before the 10-year Treasury yield (2.56 percent) will gravitate toward two percent.  Mid-March, it lost 2.62 percent – a crucial level going back a decade.  This resistance is the path of least resistance near term.  Perhaps anticipating this, non-commercials once again have been adding to net shorts, currently at a 14-week high.  Last September, these traders held record shorts, which as they gradually got unwound put downward pressure on the 10-year rate.

30-year bondCurrently net short 25.3k, up 6.4k.

Major economic releases next week are as follows.

On Tuesday, industrial production (March) and the NAHB housing market index (April) come out.

In February, US capacity utilization rose 1.3 percent year-over-year to 78.2 percent.  Last November’s 78.8 percent was the highest since January 2015.

Builder sentiment in March was flat with February’s 62.  Sentiment dropped from 74 in December 2017, which was the highest since July 1999, to last December’s 56, before rebounding a tad.

February’s trade deficit is on tap for Wednesday.  The US deficit in January was $51.1 billion, with a 12-month total of $3.13 trillion.

March’s retail sales are due out Thursday.  February sales were up 2.2 percent y/y to a seasonally adjusted annual rate of $506 billion.  Last October’s $511.6 billion was the highest ever.

Friday brings housing starts for March.  Starts dropped 8.7 percent m/m in February to 1.16 million units (SAAR).  The cycle high 1.33 million units was reached in January 2018.

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