Peek Into Future Through Futures, How Hedge Funds Are Positioned - Tuesday, Jan. 5

shallow focus photograph of black and gray compass

Following futures positions of non-commercials are as of December 29, 2020 (data was made public this Monday instead of last Friday due to New Year’s holiday).

10-year note: Currently net long 25.2k, down 24.9k.

FOMC minutes for the December 15-16 meeting will be released tomorrow. This was the last scheduled meeting of 2020. For the uninitiated, there are eight scheduled meetings in a year. In addition, the Fed holds unscheduled meetings, should the need be, as was the case last March.

Not a whole lot is expected to come out of Wednesday’s minutes. The Fed obviously left the fed funds rate unchanged in that meeting. Rates are already zero-bound. Speaking to the press at the end of the meeting, Chair Jerome Powell said the central bank would adjust its quantitative easing program if the need be but for now would purchase at least $120 billion/month in US treasury bonds and mortgage-backed securities.

Bond bears (on price) are on the other side of the Fed on this. Thus far, they have waged a losing battle. The 10-year Treasury yield (0.92 percent) tried to reclaim one percent several times in November and December, but to no avail. Rates have not been over that threshold since last March. The closest was on the 4th last month when these notes yielded 0.99 percent before reversing lower.

On the weekly, there is room for the 10-year to head lower.

30-year bond: Currently net short 175k, up 4.6k.

Major economic releases for the remainder of the week are as follows.

The ISM manufacturing index (December) comes out later this morning. In November, manufacturing activity dropped 1.8 points from October’s 59.3, which matched the high of September 2018.  

Durable goods orders (November, revised) are scheduled for Wednesday. The advance estimate showed orders for non-defense capital goods ex-aircraft – proxy for business capex plans – rose 0.4 percent m/m in November to a seasonally adjusted annual rate of $70.9 billion – a new record. Earlier in April, orders were down to $61.3 billion.

The ISM non-manufacturing index (December) is on tap for Thursday. Services activity in November fell seven-tenths of a point m/m to 55.9.

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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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